Couple Earning 100k

Generalisation

I’ve drawn two curves at 30% and 35% net income. Say this represents two couples with a different debt tolerance and that the preference for the buyers are to opt for the highest amount they can afford given that tolerance.

The couple at 30% will opt for a mortgage below the maximum available at 3.35%, moving left along the curve as rates increase. Where as at a 35% tolerance the buyer will opt for a mortgage below the maximum at 4.6%.


In this scenarion at 4.4% the couple at 30% tolerance will be borrowing at 3.5 times income, the previous restriction.

In this scenarion at 4.4% the couple at 30% tolerance will be borrowing at 3.5 times income, the previous restriction.