Q&A: The impact of teaser loans in USA

Hi Olly,
I really enjoy reading your articles. With all the talk about house prices and the market, I am surprised not to see any commentary (from you or others) about the next ‘lot’ of teaser loans that will come off the books in the USA. For others benefit, the teaser loans were a pre cursor in the sub prime market in USA. Low interest loans for a couple of years, that then have the interest rates jacked up = people cannot afford the new repayments = they lose their house. Could you possibly offer your opinion on this, as I feel it may have an impact in NZ in 2012/13.
Many thanks, Rob

Dear Rob
I too have heard about the “teaser loans” but NZ didn’t go in for these to the same extent so the impact here will hopefully be limited.
Furthermore I believe the Authorities in the US will not allow them to get out of control by printing more money = inflation.
They have had plenty of notice and practice.
Cheers, Olly

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