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Danes Get 20-Year 0% Mortgages

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Re: Danes Get 20-Year 0% Mortgages

#221

Post by ZephyrBlu »

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…

> You're implying "worrying about" or wanting to know what the monthly payment is on a loan is a bad thing and I don't understand why

I believe what he is actually saying is that most people _only_ care about their monthly payment.

Re: Danes Get 20-Year 0% Mortgages

#222

Post by zhdc1 »

patatino wrote: post #99
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…

Well, I can't talk about Geneva or Zurich because both cities are very expensive. But generally, prices are going up, the down payment is normally 20% of the price. This is one problem, another one is how they calculate the risk. The "law" is you have to be able to pay the mortgage at 5% and that 5% cannot be more than 1/3 of your income. So if you buy a 1.25m house and take a 1m mortgage 5% is of that is 50k, so you…

From what I've seen, prices have been static and have even started to fall in some areas. There are a lot of people staring down a refinance on a 5 or 10 year interest-only loan in the middle of a recession.

I haven't looked it up, but from what I've been told a lot of it also has to do with investment laws for Pillar 2 and 3 retirement accounts (a certain percentage has to go into Swiss assets). Taking 1-1.5% over LIBOR/SARON or whatever the SNB rate is makes sense, but the fall-out in a couple of years if and when rates start to move up again isn't going to be pretty.

Re: Danes Get 20-Year 0% Mortgages

#223

Post by imtringued »

GreeniFi wrote: post #32
cesis wrote: post #24

Earlier quoted context omitted.

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

It's also bad news for consumers because they cannot finance consumption with mortgages. You're never going to see consumer inflation if you're giving money to everyone except the consumers.

Re: Danes Get 20-Year 0% Mortgages

#224

Post by l33tbro »

izacus wrote: post #202
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…

> 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): One important difference between Geneva and Denmark though - Genevas extremely expensive housing market (in both purchase and rent prices) is driven by its geographical location. It's surrounded by mountains on most sides and sitting on a lake. This means there's…

Switzerland also has the highest level of household debt (which includes mortgages) in the world. Lending volume and price usually have a fairly linear correlation.

Re: Danes Get 20-Year 0% Mortgages

#225

Post by renewiltord »

asiando wrote: post #148
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…

> The price alone is mostly irrelevant for the buyer. Sorry but wow. This is not the kind of comment I expect on HN, but rather from my uncle: “We got this new Lexus, it’s only $500/month!” “Yes, for 200 years”

I wonder whether the ability to discern description and justification is correlated with other abilities. I suspect it is, but if anyone is aware of studies I'd be interested.

Re: Danes Get 20-Year 0% Mortgages

#226

Post by poulsbohemian »

mywittyname wrote: post #125
yuliyp wrote: post #121

Earlier quoted context omitted.

Where is the profit on a 0% loan? Who would pay more than face value for a stream of payments going into the future?

Lenders make money on the currency exchange. This doesn't make sense for Americans because they use a single currency for everything, but in Europe, there is a benefit to having a revenue stream in a desirable currency which is appreciating relative to the Euro. To the buyer, the loan looks like 0% because the buyer pays back the loan in Franks or whatever. The bank, meanwhile, gave out a loan of X Euros, and is rece…

I'm not sure if / how this is done in Europe, but do these banks presumably also package these loans for sale, where a potential buyer of the note simply wants the recurring income stream for the next 15 or 30 years? That's the basic scheme here in the US anyway.

Re: Danes Get 20-Year 0% Mortgages

#227

Post by imtringued »

marvin wrote: post #138
acwan93 wrote: post #42

Earlier quoted context omitted.

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,…

I've never understood mortgage refinancing in the US. Isn't the lender taking a loss when you refinance, since their 20-year asset will now pay less in interest than before? How does the lender make up for this loss, if the debtor isn't paying the difference every time they refinance to a lower interest rate?

If you have a $1 million mortgage with 5% interest you are paying $50k interest per year. Meaning you are paying most of your interest at the beginning of the loan. If you are down to $750k after 10 years and refinance to 2% you have already paid around $350k in interest . The bank has already gotten the biggest chunk of the profits but takes a "loss" on the remaining portion.

Re: Danes Get 20-Year 0% Mortgages

#229

Post by mikestew »

imtringued wrote: post #213
Triv888 wrote: post #149

Earlier quoted context omitted.

> 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.

Here in the U. S., specifically WA state, the shorter the mortgage, the lower the interest rate. For example, when we refinanced we could get 15 years @ 2.5% or 30 years @ 3%. In that case, the "low interest mortgage" was the 15 year mortgage.

So either one of us has some miscommunication, or things are different where you live.

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