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

Mortgages are a manufactured product (2022)

bitsaboutmoney.com

Post reply on HN
Print view View original

61–70 of 127 posts

Re: Mortgages are a manufactured product (2022)

#61

Post by deprecative »

anamax wrote: post #50
hkt wrote: post #33

Earlier quoted context omitted.

A thought I've had regularly is that any financial product so widely required ought to be provided at cost (base rate of interest) through central banks. Why bother with middlemen? As the author says, it is because the mortgage is hardly for my benefit. Its purpose is to grant some privileges to those who remain on the treadmill of work for a long time without falling off, and to act as something like a tax, levied o…

> A thought I've had regularly is that any financial product so widely required ought to be provided at cost (base rate of interest) through central banks. Why bother with middlemen? In the US at least, govt has problems running "retail." (It also has problems running wholesale, as evidenced by the give-aways to BlackRock, but ...)

The US certainly has issues with even accepting the government being able to do good things. A small but highly vocal part of the populace has all but ensured the well is poisoned. I think we could, if we wanted, create an institution like the USPS for financial services. That would be able to issue a mortgage. It's not going to happen for the simple fact they're doing their best to privatize the USPS and beloved programs like Social Security.

Re: Mortgages are a manufactured product (2022)

#62

Post by epolanski »

abrichr wrote: post #6
beezlewax wrote: post #5

Earlier quoted context omitted.

Yep that was the last thing I read. Absolute gibberish

The second half of the following sentence clears it up: > The analogy is less about providing visibility into the contents of pipes (though mortgages must do that) and more “highly specialized manufactured widget that the entire world sits downstream of.”

Does it? I feel even more confused.

I think many people would benefit from getting something out of the Economist's style guide:

https://cdn.static-economist.com/sites/default/files/store/S...

Re: Mortgages are a manufactured product (2022)

#63

Post by epolanski »

In Europe (or at least Italy and Poland which I know a bit) mortgages are mostly instruments to get new clients.

Banks barely make any money at all from mortgages, but they can then upsell you other things.

Mortgages rates depend on lending rates published by the European Central Bank, and on top of that banks apply a small spread (generally below 1%).

But they don't love the instrument at all, it doesn't make much money if any.

Re: Mortgages are a manufactured product (2022)

#64

Post by Panzer04 »

hkt wrote: post #33
jjmarr wrote: post #15

Earlier quoted context omitted.

The thesis is that mortgages are not primarily a service a bank provides to a homeowner. They are a financial product that banks sell to institutional investors (as an example) that want a guaranteed cashflow decades into the future. Of course, a multibillion dollar pension fund does not want to directly write John Doe a mortgage and deal with him. Their business is giving money to pensioners, not selling mortgages.…

A thought I've had regularly is that any financial product so widely required ought to be provided at cost (base rate of interest) through central banks. Why bother with middlemen? As the author says, it is because the mortgage is hardly for my benefit. Its purpose is to grant some privileges to those who remain on the treadmill of work for a long time without falling off, and to act as something like a tax, levied o…

The government is almost never the right provider of a commodity service. What possible benefit is derived from having the government manage the making of loans, already a competitive market?

Mind that the US is somewhat unique in its subsidy of early-prepay 30y fixed mortgages - they exist nowhere else, because no sensible private lender would offer such a product otherwise (or a huge markup).

Re: Mortgages are a manufactured product (2022)

#65

Post by mindvirus »

This is a fascinating article, though I'm not sure I grok the analogy about flow meters.

Given they're so securitized, I wish I could buy back my own mortgage at a discount given how much interest rates have risen. It feels that given the notes about conforming mortgages being fungible, that product/service should exist.

Re: Mortgages are a manufactured product (2022)

#66

Post by [deleted] »

deprecative wrote: post #61
anamax wrote: post #50

Earlier quoted context omitted.

> A thought I've had regularly is that any financial product so widely required ought to be provided at cost (base rate of interest) through central banks. Why bother with middlemen? In the US at least, govt has problems running "retail." (It also has problems running wholesale, as evidenced by the give-aways to BlackRock, but ...)

The US certainly has issues with even accepting the government being able to do good things. A small but highly vocal part of the populace has all but ensured the well is poisoned. I think we could, if we wanted, create an institution like the USPS for financial services. That would be able to issue a mortgage. It's not going to happen for the simple fact they're doing their best to privatize the USPS and beloved pro…

[deleted]

Re: Mortgages are a manufactured product (2022)

#67

Post by taffer »

mindvirus wrote: post #65

This is a fascinating article, though I'm not sure I grok the analogy about flow meters. Given they're so securitized, I wish I could buy back my own mortgage at a discount given how much interest rates have risen. It feels that given the notes about conforming mortgages being fungible, that product/service should exist.

> I wish I could buy back my own mortgage at a discount given how much interest rates have risen

But why would you want to do that? If you take out a fixed-rate loan and interest rates rise, you are already making a profit. Financially, there would be no further benefit from the buy-back of the loan.

Re: Mortgages are a manufactured product (2022)

#68

Post by [deleted] »

hkt wrote: post #33
jjmarr wrote: post #15

Earlier quoted context omitted.

The thesis is that mortgages are not primarily a service a bank provides to a homeowner. They are a financial product that banks sell to institutional investors (as an example) that want a guaranteed cashflow decades into the future. Of course, a multibillion dollar pension fund does not want to directly write John Doe a mortgage and deal with him. Their business is giving money to pensioners, not selling mortgages.…

A thought I've had regularly is that any financial product so widely required ought to be provided at cost (base rate of interest) through central banks. Why bother with middlemen? As the author says, it is because the mortgage is hardly for my benefit. Its purpose is to grant some privileges to those who remain on the treadmill of work for a long time without falling off, and to act as something like a tax, levied o…

[deleted]
Post reply on HN