TaxingYou're likely right about the banks rule re the number of...

Taxing

You're likely right about the banks rule re the number of times the servcing of the loan must be covered by income... the rate of after tax income which they'll allow to service the debt is likely around 25/30% ---as you state.

This however, does not change the numbers significantly --- all it does is change the value of the house they bought... the amount a new couple in similar circumstances to Jihn & Julie would be able to borrow in 2015 would still fall by 25% under the assumptions outlined in my initial example... and thus the effect on the property market will be the same.