Mortgages are a manufactured product (2022)

Post by nasmorn » Sun, May 19, 2024, 8:52 PM UTC

rsynnott wrote: post #99

formerly_proven wrote: post #96

Earlier quoted context omitted.

Maybe that’s because Americans move around more and can’t be nailed to a house for 15-30 years like every european homeowner is (where you can neither refinance nor pay back early without paying essentially all future interest payments at once - US mortgage conditions are insanely good).

In general, in Europe, either: - It is the norm to use either a variable rate or series of short fixed rates OR - Redemption fee is capped (for instance in France it’s capped at one quarter worth of interest). I’m not sure it’s normal anywhere to have a 30 year fix which you can’t get out of? Which country are you thinking of?

Post by astrange » Sun, May 19, 2024, 9:07 PM UTC

Joel_Mckay wrote: post #44

hkt wrote: post #36

Earlier quoted context omitted.

Generational wealth theft does seem like a fair thing to complain about. Mortgages became a lever: most countries have regulations saying what lending ratios people can have, who is and is not eligible, etc. Want to control inflation over the long run? Raise interest rates and destroy the buying power of a generation. In the UK this is even more flexible, as we tend to only fix our mortgage interest rates for a few y…

The odd generation of young males still living with their parents after college is enough of a reality check for many. I just find it fascinating people think this is somehow a controversial observation. Of course, I also welcome facts that say everything is fine, because it makes me feel more hopeful about their futures. =3

Post by Joel_Mckay » Sun, May 19, 2024, 10:19 PM UTC

astrange wrote: post #103

Joel_Mckay wrote: post #44

Earlier quoted context omitted.

The odd generation of young males still living with their parents after college is enough of a reality check for many. I just find it fascinating people think this is somehow a controversial observation. Of course, I also welcome facts that say everything is fine, because it makes me feel more hopeful about their futures. =3

None of the actual empirical economic data in the US resembles your statement - average household sizes have gone down over time, real incomes have gone up, and Gen Z wealth is doing fine. It is true in the UK but that's simply because 1. the UK economy is doing pretty badly in general 2. you really, really don't build enough new housing. If housing construction was unrestricted it wouldn't matter much what interest…

Post by lottin » Sun, May 19, 2024, 11:19 PM UTC

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…

Post by to11mtm » Mon, May 20, 2024, 12:29 AM UTC

rwmj wrote: post #18

> A mortgage has a quirky little subcomponent called a Mortgage Servicing Right (MSR). Every month, it needs to collect money from the borrower and send that money… somewhere. This implies, minimally, a mailbox where you can send checks, someone to open the mail, and a phone number with a CS representative who can answer questions like “What is my current balance?” and “Did you get the last check I sent you?” Like, s…