ALL purchased housing is speculation. It doesn't matter if it's a variable or fixed rate loan it's still a speculation. The owner is speculating that the property will at least be worth the purchase price. They are speculating the the value will increase or in worst case scenario, remain the same as long as they own it.
Those poor slobs who bought on a variable rate loan speculated that the interest rate would stay low or go lower. That is extreme leveraging of the investment the same as those folks who bought stocks on credit in the 20's. When the value came into question the loan became due on demand. No cash to make up the difference or pay it off, you lose, it all.
Those who gambled on flipping the house and that includes those who got an interest only loan, were like a professional gambler. They rolled the dice on the investment. If they sold before the mortgage bubble popped they made out. If not, then the bills are coming due.
Those with a fixed rate loan hedged the bets by maintaining a less risky investment with a lower rate of return (ie. higher initial interest rate). That's like buying a mutual fund instead of long shot penny stocks. It's still a gamble but the risk is mitigated by the diversification of the fund or the stability of the loan vs value in the case of the house. Those folks are not hurting unless they lost their income. Unfortunately in the case of an economic down turn a loss of income can be a real possibility. This is not a case of an extreme gamble like bad loans, it's just a bad break and could happen to most anyone.
Unless you can pay cash for your house, and I seriously doubt anyone here did short of an inheritance, you are borrowing money you do not have to get the house today. Still speculation but you get to choose the degree of risk involved.
