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Danes Get 20-Year 0% Mortgages

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Re: Danes Get 20-Year 0% Mortgages

#311

Post by ashtonkem »

SilasX wrote: post #76
tveyben wrote: post #25

But one forgets that even though the interest rate is 0% the COST of the loan is !=0, we still have to pay a "bidragsssats" which is an "administrative fee" to have the loan The interesting part is that that this rate can be changed over time to whatever the lone-shark wants it to be, thus - as always - you need to look at the TCO. ÅOP as it is in danish: "Årlig Omkostning i Procent" - aka the Yearly cost in percent.…

Yeah, that's what I figured. Which I why I was pleasantly surprised to learn (at least according to an HNer in the know) that, in the UK at least, rates must be expressed in a way that accounts for all fees -- so something like this couldn't be called 0%. https://news.ycombinator.com/item?id=11082905

Honesty in advertising laws are really a wonderful thing.

Re: Danes Get 20-Year 0% Mortgages

#312

Post by oblio »

chenster wrote: post #84
oblio wrote: post #34

Earlier quoted context omitted.

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.

"Asia" is very vague and not helpful, unfortunately. I was asking about Japan ;-)

Re: Danes Get 20-Year 0% Mortgages

#313

Post by fogihujy »

jseliger wrote: post #162
patatino wrote: post #99

Earlier quoted context omitted.

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…

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.

Alas, that won't work in Denmark. Any politician threatening to do something that would result in housing prices going down would be voted out of office by angry homeowners and Copenhagian landlords.

Re: Danes Get 20-Year 0% Mortgages

#314

Post by tomatocracy »

coliveira wrote: post #288
tomatocracy wrote: post #170

Earlier quoted context omitted.

Some banks can borrow some of their funding requirements at negative rates for short periods of time. Banks fund themselves using a variety of sources - bonds and money market instruments (of various types), equity, deposits, past profits (which is really the same as equity) and various central bank mechanisms. Of those the only ones where there is a decent chance of funding at negative rates are bonds/money markets…

But modern banks don't stay with a mortgage loan for long periods of time. Thanks to the "miracle" of derivatives, mortgage loans are repackaged and sold to other institutions, so the risk they carry is very small compared to the old times.

Sorry, that's just not true, at least for mainstream large European banks.

Re: Danes Get 20-Year 0% Mortgages

#315

Post by jobigoud »

saberdancer wrote: post #157
oblongx wrote: post #144

Earlier quoted context omitted.

How does the bank make money when it's zero interest loan? Serious question, the article didn't mention anything about it. I'm sure it still costs a few bucks in fees to get the loan but isn't the interest where the real profit is?

Banks wouldn't offer a loan for zero interest if they have to "buy" money for interest. In these type of situations, they are either lending at negative interest rate from the central bank, or they are paying interest to central bank for "safekeeping" (central bank is at negative interest rate) or consumers are keeping money in banks at negative interest rate (less likely). What makes money for the bank is the differ…

> What makes money for the bank is the difference of interest rate between money they buy and money they sell.

But they do not have to buy the same quantity of money as to what they are selling. When making a loan money is created out of thin air.

Re: Danes Get 20-Year 0% Mortgages

#316

Post by marvin »

tathougies wrote: post #293
marvin wrote: post #277

Earlier quoted context omitted.

An honest assessment would conclude that our laws are too creditor friendly. They allow lenders to take on more risk than they otherwise would have. I don't know how our delinquency rates compare to the rest of the world, but there's quite a bit of it. My take is that these laws are due to somewhat unflattering protestant cultural heritage, rather than a deliberate decision to encourage financial responsibility. I st…

I mean... I agree with you. I like Norway's model... Please don't be so confrontational.

Oh, it wasn't meant to be confrontational towards you. Sorry that that's how it came across. If it ended up sounding a bit harsh, my annoyance was directed towards the legal system.

It's just - I do have a bit of a problem with the underlying morality of this system, and our (Norway's) culture is so homogenous that few locals ever question these things. It's refreshing to share this on a forum where lots of people are curious and have an open mind.

It's not like this is a massive social problem. People who end up in this kind of misery still have a roof over their heads and get to eat and have good healthcare access. But they wouldn't really expect to ever get back on their feet status wise, and that's sad.

Re: Danes Get 20-Year 0% Mortgages

#317

Post by Robin_Message »

bluedevil2k wrote: post #20
ghshephard wrote: post #9

Earlier quoted context omitted.

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.

I'm guessing "dove sorry" is diversity, but who knows!

Re: Danes Get 20-Year 0% Mortgages

#318

Post by srean »

ganeshkrishnan wrote: post #296
apta_ wrote: post #238

Earlier quoted context omitted.

As a Muslim, almost every "Shariah compliant" financing contract I came across is not compatible with Islamic Law (Shariah). Unfortunately, we're just taking modern parasitic and usurious financial contracts, and wrapping them under "Islamic" terms, and selling them as such. Any actual investigation of such contracts reveals that they're nothing but interest and usury in disguise. Islam seriously warns about this sor…

>we would immediately rule out things like stock shorting, put and call options, margin and leverage trading, mortgages, interest bearing loans, selling debt for debt, and so on. These are the very foundations on which modern society is built and which drives the entire humanity forward. Sure, some people have managed to race ahead but on a whole we, as humans, have progressed from clubbing each other for food to arg…

Could you point me to some reading material that establishes that all those were necessary for the forward movement of humanity. Its not a snark, I would be genuinely interested in learning about this point of view.

I have no trouble accepting that these things co-occurred with the movement. I don't have a good reason/foundation to argue that they were necessary, or even beneficial, apart from artifacts that smoothen and/or amortize risks, insurance, for example.

Re: Danes Get 20-Year 0% Mortgages

#319

Post by dagw »

znpy wrote: post #249
adewinter wrote: post #193

Earlier quoted context omitted.

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…

> 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. I haven't owned a car and i'm almost 30, and have always enjoyed public transport so far. When I'll decide to buy a car, I'll just f-ing pay it in full and be done with it.

When I'll decide to buy a car, I'll just f-ing pay it in full and be done with it.

That's what I did, and as such I agree, but just be aware that you might very well end up paying more overall that way (assuming you're buying a new car from a dealer).

Re: Danes Get 20-Year 0% Mortgages

#320

Post by saberdancer »

jobigoud wrote: post #315
saberdancer wrote: post #157

Earlier quoted context omitted.

Banks wouldn't offer a loan for zero interest if they have to "buy" money for interest. In these type of situations, they are either lending at negative interest rate from the central bank, or they are paying interest to central bank for "safekeeping" (central bank is at negative interest rate) or consumers are keeping money in banks at negative interest rate (less likely). What makes money for the bank is the differ…

> What makes money for the bank is the difference of interest rate between money they buy and money they sell. But they do not have to buy the same quantity of money as to what they are selling. When making a loan money is created out of thin air.

I know this is often said, but I do not think it is true.

They do not have to hold deposits in the amount they lend out, but they do have to have the money. They have to hold back a fraction of the deposits.

If money was created out of thin air (in consumer banks), any loan with any interest rate (even negative one) would be highly profitable.

I am not talking about central banks.

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