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Danes Get 20-Year 0% Mortgages

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Re: Danes Get 20-Year 0% Mortgages

#31

Post by andechs »

disown wrote: post #19

Do 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…

The tax deduction on mortgage interest is one of the most regressive pieces of tax policy.

Those with more expensive housing benefit more from the credit. Non-homeowners do not benefit at all, and renters tend to be poorer than homeowners.

Re: Danes Get 20-Year 0% Mortgages

#32

Post by GreeniFi »

cesis wrote: post #24
GreeniFi wrote: post #17

What is the incentive for a bank to lend at 0%? Surely it’s more profitable to do nothing?

Central Banks can enforce negative interest rates. https://en.m.wikipedia.org/wiki/Negative_interest_on_excess_...

Sheeesh. Bad news for entrepreneurship. As due to mortgage lending rules, it’s very difficult to get a loan as a business owner rather than an employee with steady, bankable, salary

Re: Danes Get 20-Year 0% Mortgages

#34

Post by oblio »

ageitgey wrote: post #13

My 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…

I wonder if Japan is similar. Haven't they had deflation for close to a decade?

Re: Danes Get 20-Year 0% Mortgages

#35

Post by SoSoRoCoCo »

ageitgey wrote: post #13

My 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…

> 2. Since house prices are now super high, only people who have saved up a big down payment can actually buy a house.

Isn't this what is happening right now in the US, that the down-payment is one of the barriers, since less than 10% (forget 20%) down has huge penalties long-term?

Re: Danes Get 20-Year 0% Mortgages

#36

Post by lumost »

tempsy wrote: post #2

only a matter of time when we start seeing negative rates on mortgages.

At the end of the day isn't this just a regressive tax in favor of land owners? How many compounding cycles would it take before no one cares about a wipe out in land valuation as it's primarily owned by the extremely wealthy.

Re: Danes Get 20-Year 0% Mortgages

#37

Post by lotsofpulp »

CogitoCogito wrote: post #27
nugget wrote: post #23

Earlier quoted context omitted.

Another potential consequence is that if the price of your house falls more than the down payment you invested, you may be incentivized to simply walk away. The price could fall for any number of reasons: a market crash and country-wide depression widely impacting many people, or an individual owner who simply did no maintenance/upkeep over a period of years and the property is in disrepair. The disrepair scenario is…

Can Danes just walk away from their loans simply returning the home? I believe that's true in the US, but I don't think that's universal.

Even in the US, only 12 states are “non recourse”.

https://www.financialsamurai.com/non-recourse-states-walk-aw...

Re: Danes Get 20-Year 0% Mortgages

#38

Post by danhak »

CogitoCogito wrote: post #27
nugget wrote: post #23

Earlier quoted context omitted.

Another potential consequence is that if the price of your house falls more than the down payment you invested, you may be incentivized to simply walk away. The price could fall for any number of reasons: a market crash and country-wide depression widely impacting many people, or an individual owner who simply did no maintenance/upkeep over a period of years and the property is in disrepair. The disrepair scenario is…

Can Danes just walk away from their loans simply returning the home? I believe that's true in the US, but I don't think that's universal.

It's not true in all of the US (recourse vs. non-recourse). In all but 12 states, a lender can come after your other assets if the value of your collateral does not satisfy your debt.

Re: Danes Get 20-Year 0% Mortgages

#39

Post by lucideer »

GreeniFi wrote: post #17

What is the incentive for a bank to lend at 0%? Surely it’s more profitable to do nothing?

Denmark has had negative interest rates in the past (though typically for 10 years), so there's that hedge for starters, but there's also fees & gov subsidy/lending incentives/enforcement

Re: Danes Get 20-Year 0% Mortgages

#40

Post by mywittyname »

1stcity3rdcoast wrote: post #28
justinzollars wrote: post #16

Earlier quoted context omitted.

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?

Opportunity cost of the higher monthly payment surely factors in?

Yeah, I got a 15 year loan to save about 25% on my interest payments (3% vs 4%). Looking back, that was totally stupid because had I got a 30 year loan, and invested the difference (which I absolutely would have), I would earned a substantially greater return from the resulting stock boom.
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