Mortgages and Recession

For the not-so financial savvy, Encarta defines Mortgages as agreements by which people borrow money from a money-lending organization such as a bank or savings-and-loan association and authorize that organization to take possession of property given as security if the loan is not repaid. Further, this written contract describes the agreement between a borrower and a lending organization by which a loan is given against security.

In an economic recession, would it be wise to borrow money under a mortgage? A news article recently reads:

Latest figures from the Bank of England have revealed that mortgage approvals in January unexpectedly picked up. The Bank announced that mortgage approvals increased to 74,000 last month, which is 2,000 more than in December. Vicky Redwood, an economist at Capital Economics, said: "January’s household borrowing figures suggest that housing market activity has stabilized, at least temporarily."

Further,

It is thought that the housing market will weaken this year as the credit crunch affects the financial climate in the country. Other figures released from the Bank have revealed that the amount of money outstanding on mortgages in the UK is £1.19 trillion.

These figures indicate that the US recession is clearly affecting the European region as well. Also, this could also mean a volatile ‘interest’ and/or cd rates in the credit market. How do you see or asses this? Will you still consider borrowing under a mortgage agreement?