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Prof. Alessandro Gavazza of London School of Economics on mortgages, cars and market friction

Scientific Sense ®

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Taking Up a Mortgage - Is That a Good Idea?

The idea was that funding cost of banks were particularly elevated at the time because of the European suffering debt crisis. To reduce the cost for lenders, the central banks started new facilities in which they were offering loans to banks. Different people may even understand these two factors differently, right? Is that one of these issues? Yes, absolutely. And so there are always complicated calculations when you are taking up a mortgage.

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