Buy A House With 50X Leverage in Shenzhen

iFeng: 房价若非理性上涨 将会导致几大严重后果
Moreover, with a capital leverage off together with soaring housing prices. For example, Shenzhen, buy a house for ten million yuan, 20 percent down payment is 5 times leverage, and take that 20 percent or 200 million, borrow off market yup to 180 million, that is to say, with 200,000 yuan leveraged to 10 million yuan is equal to 50 times leverage, far more than the US sub-prime leverage!

If, according to media reports, the financial part of the Internet company launched the "down payment loan" financial products, such products can provide several hundred thousand dollars for the purchase, unsecured credit loan funds discretionary. Obviously, this kind of financial model through the Internet "plus leverage" in the purchase of the way, and then the US "subprime" really exactly the same, which greatly increases the risk of real estate finance ......
Technically, with zero downpayment and negative amortization, there were cases of infinite leverage...but the point stands.

Even without leveraged to the hilt, the high price of homes will blow a hole in your disposable income:
For example, according to China's current high prices, the purchase of a 1.3 million yuan house, suppose you want a loan of 1 million yuan, the repayment period is 30 years, even at the low interest rate of 5% is calculated, the interest alone will come to 930,000 yuan, and the money does not include service fees, commissions and various other fees ......
It finishes with a warning from Holland:
In 1634, the Dutch East India Company merchant brought some beautiful and rare tulip bulbs, the whole country got a "tulip mania." To 1636, a value of $ guilders tulips can be exchanged eight pigs, four fat oxen, two tons of cream, one thousand lbs cheese, a silver cup, a bag of clothes, a mattress with beds plus a boat for the first time in recorded history of Western economic bubble, the final outcome, and all other types of foam, like history - burst, not another repeat.

History has witnessed, the overheated real estate and economic crisis go hand in hand, sustained high prices will lead to a financial crisis or economic crisis! As the real estate will rise to huge loans, the banking system will face a "debt write-downs," the risk. According to Fisher's theory of modern economics, the risk of deflation comes from debt, whether business or personal, in the face of rising debt on the occasion, will have to tighten consumer spending, reduce the ability for consumption, this is the severe consequences of raising debt levels!

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