Rocket Mortgage to trim 8% of workforce as home-loan market shrinks • Hacker News Board

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#111

Post by the_mitsuhiko » Thu, Apr 28, 2022, 9:32 AM UTC

xyzzyz wrote: post #71

colinb wrote: post #50

Earlier quoted context omitted.

No. That’s not the case. I had a fixed rate mortgage in the UK. Now I have one in Ireland. Two of my colleagues have taken them in the last couple of months. They’re very common. But.. in both countries such terms are for a relatively short period. E.g 5 years fixed changing to SVR for the remainder of the loan. I haven’t heard of loans fixed for the entire duration. I would’ve got one if I had found it. I can’t spea…

That’s not what Americans mean by “fixed rate”. In US, that means 30, or more rarely 15 year mortgage, where the rate is fixed for entire duration. The mortgage where it’s only fixed for some initial period is called “adjustable rate mortgage”. Your comment just supported the person you replied to being correct, that fixed rate (in US sense) mortgage market is nonexistent in most of Europe.

You can absolutely have a 30 year mortgage that is fixed all the way through. It's rare that people take it though, most opt to 5-10 years fixed with variable late afterwards from my own experience (Austria). The standard product used to be fixed rate.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#112

Post by matsemann » Thu, Apr 28, 2022, 9:33 AM UTC

runeks wrote: post #59

oliwarner wrote: post #55

Earlier quoted context omitted.

Whole-term-fixed rates are pretty uncommon in Europe. Fixes of 2, 5 sometimes 10 years are products most providers offer, but as the term increases, the rate shoots up, to offset rate uncertainty. My question is: why would you fix for 30yr when you know you're paying multiple points to offset market uncertainty? Remortgaging every couple of years takes a bit of time, and shopping around, but is much cheaper.

> My question is: why would you fix for 30yr when you know you're paying multiple points to offset market uncertainty? To fix your monthly payment for the next 30 years. Furthermore, with a fixed rate mortgage you can benefit from interest rate volatility since you can always buy back the debt at par. In practice this means you can: 1. Take out a fixed rate loan for $n at x% 2. If the rate doubles (to 2x%) you can re…

Danish loans are a bit special, though, as in most people don't pay them down, but just use them as a way of having a fixed rent. At least that's my experience, all my danish family own their houses, but have almost done no real payments on the loans. Whenever they've paid down a bit, that is just refinanced to a new loan so they get cash, aggressively promoted by the banks. Or the equity is just based on a hope that the loan will stay the same but the value of the property increase. Which it certainly has not.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#113

Post by elevaet » Thu, Apr 28, 2022, 9:34 AM UTC

refurb wrote: post #27

elevaet wrote: post #17

Earlier quoted context omitted.

In Canada rates are creeping up from really low, often under 2% still.

And a median sale price that has hit ~$800,000, which is double the US.

It's nuts. Canada has a lot of good things going for it, but housing affordability is at a crisis point.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#114

Post by pooper » Thu, Apr 28, 2022, 9:34 AM UTC

lmt55 wrote: post #102

hans1729 wrote: post #96

Earlier quoted context omitted.

I did not miss those people, but my wording was loaded and so the point got lost in translation. I implicitly captured them under b) "[...] it's dumb to buy estates where the price is set by people and institutions that have n times your own income/net worth" , where dumb is a loaded term for your > "to the point where it no longer seems rational" . > But crucially, the presence of this group of people arguably turns…

This is fair, you didn't miss those people. But I think it was worth me highlighting them because they are, as I argued, very important. I somewhat agree with your argument. Housing costs more than other assets compared to its economic value, exactly because people have an emotional reaction to the idea of owning it - or the idea of not owning it. However I have seen middle-class people overextend themselves to 'buy…

A real estate investment newsletter suggests that for a successful real estate investment, as a rule of thumb you should be able to charge almost one percent of the cost of the house as rent because a rational investor shouldn't count on the value of the house going up.

I am curious what you guys think of this statement. I think the idea is if the potential rent you get out of your investment is too much under one percent, you might be better off investing in something else?

Now imagine a smallish 4 bed, 2 bath, 1,638 sqft built home on a 5,861 sqft lot in Longmont, Colorado (so not exactly a city but my preference because municipal fiber) that has a sticker price of USD 499,900. I can't imagine paying USD 4,999 every month in rent for this house at the moment. What gives? Is rent too low? My instinct is home prices are way too high but it can't just be "dumb money" keeping prices high, right? Eventually, there should be more supply causing prices to drop? Is something preventing this correction? If so, how do we fix it?

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#115

Post by the_mitsuhiko » Thu, Apr 28, 2022, 9:35 AM UTC

egeozcan wrote: post #89

PinguTS wrote: post #86

Earlier quoted context omitted.

What is your reference of Europe? In Germany, 15 years, 20 years, and up to 30 years is common. I took 20 years. A close friend of mine working at a bank has an internal benefit, that the 10 year fixed rate applies for her as a fixed rate for however it takes to pay-off.

I'm also in Germany, which bank is that? I didn't find any fixed-rate offer for a 450K flat.

I'm not in Germany but an acquaintance has a 20 year fixed rate mortgage in Germany from one of the Sparkassen (Flat in Berlin).

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#116

Post by cascom » Thu, Apr 28, 2022, 9:39 AM UTC

JetAlone wrote: post #90

Buying a home mortgage is signing yourself over to a lifetime of servitude and uncertainty if you lose your income stream. Buy a property out of pocket to live in and make the most of a DIY life at a fraction of the cost and an odd stress differential, or just keep renting and be agile enough to roll with the punches.

Only if your savings are not robust enough to bridge you to replacing that income stream or you think home prices will be in a secular decline

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#117

Post by HWR_14 » Thu, Apr 28, 2022, 9:40 AM UTC

apexalpha wrote: post #33

cammikebrown wrote: post #2

Seems like the bubble burst is going to be more sudden than we thought. 30 year mortgages are suddenly at nearly 5.5-6%, listings are sitting on the market for longer, and multiple cities are cracking down on Airbnb.

That's really high compared to Europe! I just bought a new house with 2% on the interest-only part and 1.6% on the annuity part! In the month after rates grew by about 0.5% though. Seems like we hit the bottom and are climbing very slowly.

US rates tend to rise more quickly, because the standard US mortgage quoted is fixed for the life of the loan (often 30 years). Whereas a lot of European loans are variable rate, where the interest is only fixed for the first 5 or so years of the loan and then floats based on central bank rates.

So, obviously, US banks have to price more risk into their rates.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#118

Post by hans1729 » Thu, Apr 28, 2022, 9:43 AM UTC

pjc50 wrote: post #105

hans1729 wrote: post #96

Earlier quoted context omitted.

I did not miss those people, but my wording was loaded and so the point got lost in translation. I implicitly captured them under b) "[...] it's dumb to buy estates where the price is set by people and institutions that have n times your own income/net worth" , where dumb is a loaded term for your > "to the point where it no longer seems rational" . > But crucially, the presence of this group of people arguably turns…

> Going in debt for 30-40 years has zero appeal for me Going into debt at the lowest interest rate you'll ever be offered to buy a leveraged asset that's likely to increase in price and reduce the overhead you pay on your largest expense, housing, and hedge against the risk of rent increases and security against the whims of landlords? > Germany Oh, Germany. Somehow Germany has escaped the constantly increasing house…

>Going into debt at the lowest interest rate you'll ever be offered to buy a leveraged asset that's likely to increase in price and reduce the overhead you pay on your largest expense, housing, and hedge against the risk of rent increases and security against the whims of landlords?

Look, if I had enough money around, I'd maybe consider the gamble. But I don't want to buy property to sell it later, I just want to live somewhere. I'm not interested in placing bets on my salary, and I'm not interested in financial longterm-obligations. Maybe in 10 years I want a year off? What then? Maybe I want to change careers to something less intellectually demanding. Maybe I want to spend 50 hours a week with my kids. None of those are feasible if I need the salary. "No debt" is synonymous to freedom on so many levels in life design. The choice is not even close to me.

I make enough money not to worry about rent, even if it should substantially increase, which I don't see happening anyway, simply because then most people wouldn't be able to afford it and political change would become opportune in election-based systems.

>If you owned a house in London

Whats the point of even thinking about owning a house in London? Seriously. I come from uneducated parents that left me €0 and completely unprepared for life, so in my 20s, I first had to dig myself out of that crap. Now I make a good living, but I'm not rich, or filthy rich, or even wealthy. I have to actually make the money to pay that thing. Look at the development of real estate prices in the last 20 years and tell me that's a reasonable choice if I don't even intend to sell the property later (just to be stuck in the same situation again, with more cash, but in the same dilemma). It's pointless. I don't treat my lifetime-expenses as a game of assets, I opt for quality of life, which I don't achieve by giving it all to some property-owning entity who sells it to me at 3 times the price they paid a couple decades ago. I mean, you can justify doing so, but I don't see me being able to justify it.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#119

Post by nsteel » Thu, Apr 28, 2022, 9:44 AM UTC

lmt55 wrote: post #93

nsteel wrote: post #87

Earlier quoted context omitted.

Yes, here 2 and 5 years is the norm. There's talk of longer terms becoming more popular but that's probably just talk due to the current climate of rising rates. I've spoken to a few brokers lately and not one even mentioned anything longer than 5. It feels like there's a few signs now that the so-called "18-year property cycle" is due to be cut short this time around. I've only recently heard the idea so I'm not sur…

7 and 10 years are quite widely available now, although they're still not particularly popular. Not sure why brokers didn't mention them to you. Perhaps they like to show people low headline rates, or perhaps they see longer initial terms as bad for the broking business?

I think it's both of those reasons. Collecting commission on one 10-year mortgage, or five 2-year mortgages... I doubt they get 5x for the longer term, if anything.

I'd like to understand how people think about a longer-term fixed deals. How do you know where you'll be in more than 5 years? If you need to move don't you get hammered by the ERCs? Can you really rely on transferring products?

Habito One is an interesting product, that seems to be a lifetime fix (Which I have personally never seen before the UK but maybe it exists) with no ERC! Obviously the rate is less attractive but rates are still so low and I think you can offset as well.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#120

Post by lmt55 » Thu, Apr 28, 2022, 9:45 AM UTC

pooper wrote: post #114

lmt55 wrote: post #102

Earlier quoted context omitted.

This is fair, you didn't miss those people. But I think it was worth me highlighting them because they are, as I argued, very important. I somewhat agree with your argument. Housing costs more than other assets compared to its economic value, exactly because people have an emotional reaction to the idea of owning it - or the idea of not owning it. However I have seen middle-class people overextend themselves to 'buy…

A real estate investment newsletter suggests that for a successful real estate investment, as a rule of thumb you should be able to charge almost one percent of the cost of the house as rent because a rational investor shouldn't count on the value of the house going up. I am curious what you guys think of this statement. I think the idea is if the potential rent you get out of your investment is too much under one pe…

An old rule of thumb was 'buy at 10, sell at 20'. That's the ratio of price to annual rent. So if you could get 0.86% of the house price in monthly rent, it was a big bargain. If you couldn't get more than 0.43%, then it wasn't worth owning.

The rule of thumb is now obsolete, and 30-40 times rent is perfectly common in lots of places.

The newsletter is quite a lot more aggressive than even the rule of thumb from the 'good old days' when interest rates were much higher.

I used to pay around 0.2% of the market price of my apartment per month. The landlord was a professional property management company, and this situation persisted through several new contracts.