Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Danes Get 20-Year 0% Mortgages

bloombergquint.com

Post reply on HN
Print view View original

211–220 of 331 posts

Re: Danes Get 20-Year 0% Mortgages

#211

Post by cosmodisk »

f6v wrote: post #186
matwood wrote: post #143

Earlier quoted context omitted.

> 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. Yes and no. This is also true in all markets. No one really buys a house based on the price. They buy it based on the monthly payment (price - down payment and interest rate). The price alone is mostly irrelevant for the buye…

Some places a starter apartment is $25000, and you can work remotely as a developer earning, say, $4000 a month net. It's just hard to wrap my head around 20 year mortgage.

What you suggest here applies to 0.01% of any country's population. But yes,I'd love to have my London salary back in my own country.

Re: Danes Get 20-Year 0% Mortgages

#212

Post by nostrademons »

njarboe wrote: post #101
nostrademons wrote: post #89

Earlier quoted context omitted.

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…

If you own property there is not obscurity or hiding from the system. Your name is on the dead and on view for the public (especially with the new law recently passed restricting the privacy of shell corps).

Right, but the point is to avoid people caring about you, not people knowing about you. It's fine to have your name out there and on some public records about where you live if everybody is indifferent to your existence. It gets dicey when you owe somebody money, and they owe somebody else money, and then when there's not enough money to go around they're like "Shoot, where can I find some money? I know, I'll turn the screws on people who already owe me something and just collect what I'm owed." Little details like the precise payback terms of the loan and recourse available tend to get lost when court systems aren't functioning, and people only think "Oh, who owes me money that I can collect from?"

(As a side note, this is an important and often-overlooked point about mass surveillance. There's a huge difference between large data-hoovering organizations knowing about you and large organizations caring about you. Most people's best defense against identity theft or blackmail isn't cybersecurity, it's boringness, and the law of large numbers.)

Re: Danes Get 20-Year 0% Mortgages

#213

Post by imtringued »

Triv888 wrote: post #149
matwood wrote: post #143

Earlier quoted context omitted.

> 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. Yes and no. This is also true in all markets. No one really buys a house based on the price. They buy it based on the monthly payment (price - down payment and interest rate). The price alone is mostly irrelevant for the buye…

> This means that for most people, the best time to buy a house is when interest rates are sky high since falling rates are easy to take advantage of in the future. They can stay high or low for quite a long time...

A low interest mortgage has a longer duration which means the probability is much higher.

Re: Danes Get 20-Year 0% Mortgages

#214

Post by cosmodisk »

izacus wrote: post #207
jseliger wrote: post #162

Earlier quoted context omitted.

But generally, prices are going up This can be resolved any time cities want to build a lot more housing: https://www.theatlantic.com/ideas/archive/2021/01/anti-growt... . Outside of Tokyo: https://news.ycombinator.com/item?id=16704501 , no or very few cities in the Industrialized world have chosen to simply build lots of housing, which will tend to bring prices down towards the cost of construction.

Geneva is surrounded by mountains and a lake, it's hard to build more. Similarly for Zurich, there are significant hills around and most flat space is already built up.

I think it's not just that but the fact that the country is literally packed. It's about 2/3 of my country's size,yet has 3 times more people. Haven't been to Switzerland but I can imagine most parks and other public spaces must feel quite full with people.

Re: Danes Get 20-Year 0% Mortgages

#215

Post by Chickenosaurus »

gen220 wrote: post #199
wrzuteczka wrote: post #145

Earlier quoted context omitted.

Where is that Y coming from? The rates of say EUR and CHF diverging?

Yes. If CHF outperforms EUR, and the mortgage payments are in CHF, a bank that has most expenses in EUR is making a profit. You can hedge against the performance of CHF by keeping proportional revenue streams of EUR.

This theory doesn't make sense to me. Banks could simply buy foreign currency to achieve the same without the additional risk of defaulting lenders.

Re: Danes Get 20-Year 0% Mortgages

#216

Post by paozac »

vachi wrote: post #168

The key term here is Danes, not residents of Denmark, but individuals who are born or naturalized Danes, even many of the naturalized ones do not get the same rates. By default Danes get ~5% downpayment where none Danes get ~40%.... yay

Indeed, if you're a foreigner the conditions are far worse: higher interest rate, higher downpayment e lower loan amount.

Re: Danes Get 20-Year 0% Mortgages

#217

Post by nelgaard »

distances wrote: post #82
chenster wrote: post #80

Earlier quoted context omitted.

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.

In Denmark you cannot just declare personal bankruptcy.

You can ask a court to declare you bankrupt, but there are many requirements and rules. And the court may reject your application.

Re: Danes Get 20-Year 0% Mortgages

#218

Post by [deleted] »

adewinter wrote: post #193
stevehawk wrote: post #187

Earlier quoted context omitted.

You expect people on HackerNews to not accurately represent how society views something? There's a reason why the phrase "what's my monthly?" is a thing. Car dealers pushing 7 to 8 year loans is because people are worried about their "monthly." Same for rent-to-own places, mobile companies, and everyone else in the lending business.

When I decide to buy a $25k car because that's as much as I'm willing to spend I still need to determine what my "monthly" is. It matters what my monthly is because it is _a loan_ that I need to pay back every month. If I didn't need to think about what the monthly payment was I wouldn't need to take out a loan (unless I guess you got a magical loan that could only be paid off as a lump sum?). You're implying "worryi…

[deleted]

Re: Danes Get 20-Year 0% Mortgages

#219

Post by nemo44x »

adam_arthur wrote: post #179
matwood wrote: post #172

Earlier quoted context omitted.

Sure, but the point is the buyer only looks at the price as a function of the payment they can afford. If the buyer can afford 2k/month they don't really care which part moves. Rates or price? If that means high rates and lower price? Fine. Low rates and higher price? Fine, but carries more risk as you (and I pointed out).

Certainly true. Though higher price with lower rates, assuming monthly payment is the same, can be beneficial as a larger percentage of your payment goes towards principal. That only holds as a positive if price doesn't drop due to interest rate increases. But I'd definitely rather be buying a house in a high interest rate environment... don't like the tail risk given how low rates are.

It really depends. If you want to pay 100% cash for a home then yes, high interest rates are the best time to buy. But with interest rates currently below market returns, you're maybe best off borrowing 80% and using your remaining cash for a diversified portfolio of liquid investments that will likely outperform your APR long term.

If you view homes as day trading then yeah, there's risk in interest rates. But it's a home - a place to live if it's a primary residence. Ultimately if interest rates go up I don't really care since I don't plan on selling anytime soon. It doesn't change MY monthly payment. And if I did want to sell, well I'm staying in the same market - housing. So prices would drop across the board. So yes, maybe I can't sell my home for much profit or even a loss, but my home isn't the only one affected by this. Because you're in the same market, whatever you trade it for will have suffered a price drop as well.

Likewise if you buy a home while interest rates are high and they fall. Your home will have gone up in value but so will any other home you want to buy. So you're in a similar situation.

So I'm not worried about tail risk here. You do expose yourself to risk, however, if you buy more home than you can afford and we run into rough market conditions which put your income at risk. If you can't cover until things improve then you end up like the many people in 2008/2009 that lost their homes due to being over leveraged (mortgages are leverage, after all). This isn't unique to homes, however. Margin has its risks.

Here's how I see it, and I realize I'm fortunate: If interest rates begin to rise considerably over the next decade, reversing the trend of the last 40 years (!!!) then I'd consider pulling a portion of cash from certain investments to buy a home with cash after selling my current home for whatever p&l I get - if I want a new home. Or I'd just continue to live in my home and not worry about it. After all, I view my home first as a place for my family to live comfortably and then secondly as something I could make a return on one day maybe. But that isn't my primary concern.

If anything, I'd probably stay in my current home and then buy a second home (a vacation home, rental, etc) with cash.

Re: Danes Get 20-Year 0% Mortgages

#220

Post by nostrademons »

s1artibartfast wrote: post #136
nostrademons wrote: post #91

Earlier quoted context omitted.

Once rates go negative people have an incentive to take out the biggest mortgage that they can, because they're making money on each. With negative rates the payments compound. If the interest rate is $900/month, you're paying off $1000/month in principal each month, and making $100/month in profit that is applied to the home equity. You can then go use that equity to take out another loan on the property, make $100/…

I don't think there is a single tipping point the way you think. The same is true now if you consider the other ways you can spend your capital. a -1% rate on a mortgage with 20% down payment is effetely a 4% annual return on investment. If you can make 10%/yr in the stock market. and your mortgage is 3%/yr you should be maxing out the loan already and putting your cash back into stocks to make the 7% difference, not…

The reason folks don't do this is in your last sentence: stocks are not risk-free, and you're vulnerable to market downturns. Or sometimes people do do this, and they get swept out of the market when a downturn happens.

Same thing with bonds, mortgages, and loans: there's default risk.

Taking out debt at a negative interest rate has no such default risk: since you borrowed the money in the first place, if you default the lender is out the principal, not you.

(It's also worth noting that there are a few risk-free assets that offer yields higher than 0%: U.S. Treasuries, and U.S. savings accounts. And there is a predictable carry trade of firms borrowing at 0 in the EU, converting their Euros to dollars, and then depositing in the U.S. at > 0. The risk then becomes currency risk, the chance that the dollar will depreciate, which is also happening.)

Post reply on HN