Housing prices internationally are already high, it's going to be an interesting next 15-30 years.
Danes Get 20-Year 0% Mortgages
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Re: Danes Get 20-Year 0% Mortgages
#12I just refinanced at 2.0% for 15 years in California and I was feeling like a champ for timing the bottom.
Re: Danes Get 20-Year 0% Mortgages
#13My friends in Geneva tell me that this has been a thing there for a long time. It has some pretty bizarre effects on the market (according to my friends):
1. House prices rise to the point where the down payment is essentially the price of the house. The house price itself becomes imaginary. What you are really worried about is the down payment.
2. Since house prices are now super high, only people who have saved up a big down payment can actually buy a house.
3. Banks turn away borrowers because they end up with too many loans on their books and no real incentive to get more.
I would be interested to hear from people with more direct experience on how this plays out.
Re: Danes Get 20-Year 0% Mortgages
#14only a matter of time when we start seeing negative rates on mortgages.
Or on savings accounts
We already have this at least here in Denmark.
Some banks have a cap (EG 50K DKr or 250K Dkr).
https://blog.nord.investments/hvordan-undgar-du-de-negative-...
Re: Danes Get 20-Year 0% Mortgages
#15Earlier quoted context omitted.
If that happens house prices will go apeshit.
What's the argument for negative interest rates having any impact on house prices? I would think it would be mostly linear compared to 2%, 1%, 0%, -1%, etc... For example - if I have a 20 year mortgage on a $240,000 house @ 0%, I have to pay $1,000/month. If the interest rate is -1% then I have to pay ~$900/month. I don't know if that extra $100/month really moves the market on home prices that much.
I think at that point everyone should be incentivized to hold a mortgage
At the very least that increases demand for housing dramatically
Re: Danes Get 20-Year 0% Mortgages
#16I just refinanced at 2.0% for 15 years in California and I was feeling like a champ for timing the bottom.
What's the point of a 15 year when the 10 year nominal rate - inflation rate is less than the gains you will make in income?
Re: Danes Get 20-Year 0% Mortgages
#17What is the incentive for a bank to lend at 0%?
Surely it’s more profitable to do nothing?
Re: Danes Get 20-Year 0% Mortgages
#18Negative Mortgage rates would be a funny way to implement UBI. House prices go to infinity for the lifetime of the buyer.
More like Feudalism 2.0. the "U" in UBI is important.
Re: Danes Get 20-Year 0% Mortgages
#19Do Danes get tax deductions on mortgage interest? One of the best tax deductions we get is the one on mortgage interest.
Also this isn't really that great since lower interest means higher home prices. I'd rather have high interest and low home prices if I were a buyer and try to pay if off ASAP or refinance to lower interest when the rate drops. Buy when interest is high and home prices low and sell when interest is low and home prices is high.
Re: Danes Get 20-Year 0% Mortgages
#20Earlier quoted context omitted.
If that happens house prices will go apeshit.
What's the argument for negative interest rates having any impact on house prices? I would think it would be mostly linear compared to 2%, 1%, 0%, -1%, etc... For example - if I have a 20 year mortgage on a $240,000 house @ 0%, I have to pay $1,000/month. If the interest rate is -1% then I have to pay ~$900/month. I don't know if that extra $100/month really moves the market on home prices that much.
People would be incentivized to buy the absolute most expensive home they qualify for, which isn’t always a good thing. Dove sorry is the key to investments.