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Danes Get 20-Year 0% Mortgages

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Re: Danes Get 20-Year 0% Mortgages

#81

Post by sokoloff »

matsemann wrote: post #62
sokoloff wrote: post #57

Earlier quoted context omitted.

Renters are living in housing which is itself eligible for business loan deductions. If you believe that landlords use the cost of holding real estate as an input that shapes the supply side of the supply-demand balance in the broad rental market (as I do), then it seems that renters do indirectly benefit from the deductibility of the loans on the buildings in which they live. The mortgage interest deduction serves t…

But it keeps renters renters. I'd rather forego my tax deduction for owning my apartment and bake it into the normal tax. I feel it's unfair a friend can pay the same amount as me each month, but instead of paying down a loan he loses everything to a landlord. And in addition I also get to deduct the ~rents~ interest.

I'm not sure what you mean by "I also get to deduct the rents", but it doesn't match anything that I understand about the tax code.

Re: Danes Get 20-Year 0% Mortgages

#82

Post by distances »

chenster wrote: post #80
joakleaf wrote: post #48

Earlier quoted context omitted.

No. You have to pay the loan back. You cannot just walk away. I know several people in Denmark that were “stuck” with the house they were in after the price drops from the 2008 crisis until prices rose above the mortgages again. You can probably make a deal with the bank somehow at higher interests, but they’ll want there money back. You can also declare bankruptcy, but that is not simple and not without long term co…

Bankruptcy has a 7 years bad credit sentence in US. You are good as new after that. Not sure that's the case with other countries.

Many countries don't have the concept of private bankruptcies at all. You may effectively be on the hook for the rest of your life if you really messed up. Don't know about Denmark though.

Re: Danes Get 20-Year 0% Mortgages

#83

Post by linuxftw »

supernova87a wrote: post #66

There is a more basic economic question that I am curious about. I don't know how / can't believe how in the 1980s we had the era of 15% interest rates, etc (ok, I have some idea, central bank policies, inflation, etc) -- but it seems now we're in a "forever-0%-interest" situation. The reason I think is that interest/mortgage/etc rates just reflect how much people/banks/etc are willing to receive in profit for parkin…

We are in uncharted economic waters, and we have been for about 12 years. Not only is there 0% (or lower!) interest rates, we also have QE (central banks buying government assets directly), we have central banks buying corporate debt now!

This is creating market bubbles. Worthless tech stocks is one place. Housing prices have soared. Whatever might happen might happen quickly.

Re: Danes Get 20-Year 0% Mortgages

#84

Post by chenster »

oblio wrote: post #34
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?

In asia, generally down payment is very low, and even low interest that could expand up to 30, 40 years to pay back. The home price is usually much lower than western countries with a few exceptions like Hong Kong, Shanghai, etc.

Re: Danes Get 20-Year 0% Mortgages

#85

Post by chenster »

supernova87a wrote: post #66

There is a more basic economic question that I am curious about. I don't know how / can't believe how in the 1980s we had the era of 15% interest rates, etc (ok, I have some idea, central bank policies, inflation, etc) -- but it seems now we're in a "forever-0%-interest" situation. The reason I think is that interest/mortgage/etc rates just reflect how much people/banks/etc are willing to receive in profit for parkin…

> I don't know how / can't believe how in the 1980s we had the era of 15% interest rates, etc (ok, I have some idea, central bank policies, inflation, etc) -- but it seems now we're in a "forever-0%-interest" situation.

Yes, 17-20% interest rate was not unusual in 70s, 80s, but home prices were much much lower back.

Re: Danes Get 20-Year 0% Mortgages

#86

Post by SoSoRoCoCo »

tibbon wrote: post #69
jcomis wrote: post #45

Earlier quoted context omitted.

No, not really. People are still readily getting loans with far less than 10%.

In competitive markets, the issue isn't getting the loan - it's getting an offer accepted. Sellers will heavily favor a cash offer, as it's faster and far more assured of going through. One strategy I've heard about people doing is to take a pile of cash, acquire the property, and then refinance it pulling out 80% of what they put in so that they can both have a mortgage and have a stronger buying position. Add in th…

> this is one of the few places in US consumer markets

Did you mean geographically? Or temporally? because if the second, I'm pretty sure that is a direct legal consequence of the 2008 housing meltdown that boned both sides of the lending equation.

Re: Danes Get 20-Year 0% Mortgages

#87

Post by nostrademons »

incrudible wrote: post #49
GreeniFi wrote: post #17

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

It's in fact more profitable to lend at 0%, because of negative interest at the central banks, negative interest for government bonds and even negative interest for certain corporate bonds. Combined with the immense cost of hoarding massive amounts of physical cash, there aren't many options left. While a corporate bond can go sour and a government bond may well be legally wiped out, a mortgage is at least collateral…

And people wonder why the price of Bitcoin is rising...

Re: Danes Get 20-Year 0% Mortgages

#88

Post by djanogo »

useerup wrote: post #78
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…

Danes can deduct around 25% of paid interests (and "contribution fees" on mortgages). A little more for paid interests below DKK 50000 yearly and a little less for paid interests above DKK 50000. A typical home can sell for DKK 4M. With a 20 year 0% interest and 80% of the 4M mortgaged (the maximum allowed), the "contribution fee" would be set at 0,75%. That would amount to interests (0%) and "contribution fee" (0.75…

Are the property taxes high?

Re: Danes Get 20-Year 0% Mortgages

#89

Post by nostrademons »

acwan93 wrote: post #42
DevKoala wrote: post #12

I just refinanced at 2.0% for 15 years in California and I was feeling like a champ for timing the bottom.

I went through 3 refinances last year (also in CA) all at little to no closing costs for a 30 year fixed (4.00% → 3.25% → 2.5%). The math made sense every single time when factoring in the lower monthly payments and negligible closing costs. At this point I don't know what the point of the loan is anymore. Is there really any realistic intention to ever pay it off? Every single time I thought I had timed the bottom,…

The point of paying off loans at this point is so that when the whole system breaks down and people are looking for someone other than themselves to hold the bag, you have no business relations with anyone and nobody with a reason to point at you. Folks who are deeply entangled in the financial system will have a lot of potential enemies if the system fails to supply the expected standard of living to everyone. Folks who are basically self-sufficient with no major financial commitments can ride it out in obscurity.

"Neither a borrower nor a lender be / For loan oft loses both itself and friend." -- Polonius, from Hamlet

Re: Danes Get 20-Year 0% Mortgages

#90

Post by nostrademons »

war1025 wrote: post #67
bluedevil2k wrote: post #20

Earlier quoted context omitted.

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.

> Dove sorry is the key to investments. What does this mean? I am at a loss.

I assume it's an autocorrect from "diversity".
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