In 2012, almost 30% of new mortgages were advanced with a term of 30 years or longer. By lowering monthly payments, that will have allowed lenders to increase loan-to-income ratios, which can then support a higher house price-to-earnings ratio. But this channel on its own looks insufficient to explain all of the rise in LTI ratios, meaning that the HPE ratio still looks unsustainably high.
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