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Danes Get 20-Year 0% Mortgages

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Re: Danes Get 20-Year 0% Mortgages

#261

Post by xyzzy123 »

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”

When you're in a bidding war with people who reason this way, your only option is to do the same or stop playing the game.

Where "stop playing the game" means get out of hot housing markets :/

Re: Danes Get 20-Year 0% Mortgages

#262

Post by hocuspocus »

oblio wrote: post #34
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…

I wonder if Japan is similar. Haven't they had deflation for close to a decade?

The housing market in Japan is very different:

- There's no shortage, rather the opposite, even in urban areas that are still growing in population.

- Housing value typically only depreciates over time.

In Switzerland, real-estate mostly belongs directly or indirectly to pension funds. This creates all sorts of wrong incentives.

Re: Danes Get 20-Year 0% Mortgages

#263

Post by mFixman »

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”

Most of a car's price is decided by its company before it's even assembled. If I'm buying a car with cash it's irrelevant how other people pay.

House prices are defined by demand. If your uncle wants to buy a house with a 40 year mortgage of half his salary, then I'll have to pay more to match it.

Re: Danes Get 20-Year 0% Mortgages

#264

Post by apta_ »

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.…

So it is still a usurious loan. Nothing to see here.

Re: Danes Get 20-Year 0% Mortgages

#265

Post by yrimaxi »

nemo44x wrote: post #258
yrimaxi wrote: post #246

Earlier quoted context omitted.

The point of most things that you can buy should be the thing itself, not its investment-value. If not there is probably rent-seeking going on, i.e. a market failure. All things degrade due to entropy. Things cannot truly become more valuable by themselves.

Land? I think raw land is one thing that can become valuable on its own. Of course billions of years from now it will be gone. Where I live the land is very much a big part of the cost of the home. The structure is worth what it would cost to demolish plus rebuild it minus existing wear and tear/needed repairs I figure. The value of the structure doesn’t appreciate as fast as the land it is on due to degradations as…

Land, i.e. the classic example of rent-seeking.

The land doesn’t become “valuable on its own”, it’s just used to extract value from other things.

> In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him.

> ...

> As soon as land becomes private property, the landlord demands a share of almost all the produce which the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land.

Wealth of Nations

Re: Danes Get 20-Year 0% Mortgages

#266

Post by apta_ »

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 not bad news. Because interest is parasitic (it's prohibited in Islam, Judaism, and Christianity), there are other (fair) ways to become an entrepreneur. Pitch your idea to an investor (or group of investors), and have them put money into your company. If it succeeds, everyone profits, if it doesn't, you're not left with crippling usurious debt.

Re: Danes Get 20-Year 0% Mortgages

#267

Post by sneeze-slayer »

tathougies wrote: post #196
BunsanSpace wrote: post #160

Earlier quoted context omitted.

Thank god Canada created the CMHC which would insure loans and allow you a down payment as low as 5% for first time buyers. ironically because the loans where insured they offered lower interest rates on these loans, which meant they costed almost the same as 20% uninsured loans (you paid the insurance premium on-top of your mortgage payment). even if you have a 20% down it made more sense to put 5% down and put the…

In the USA, first-time homebuyers can put 3.5% down with an FHA loan, but they have to pay insurance until they reach 20% equity.

Anyone can do that, not just first time purchasers.

Re: Danes Get 20-Year 0% Mortgages

#268

Post by raverbashing »

tathougies wrote: post #195
marvin wrote: post #115

Earlier quoted context omitted.

In Norway, personal bankruptcy requires an application to the debt enforcement office (a local government authority). If the application is accepted, the debtor gives up all their assets and submits to paying all of their earnings towards their debt, for five years. A politically determined subsistence sum is all they get to keep for themselves. After five years, the agreement ends and the debt is cleared. Each perso…

Yikes. As an American, I would have thought Norway would have a much more lenient form of debt relief based on everything I hear about Scandinavia from our local press. But what you're describing seems incredibly harsh. I wonder if this is why Norwegians tend to be more financially responsible. Only being able to declare bankruptcy once certainly would make people learn their lesson? Is that true? Does it work in pra…

Don't use your credit card as a free money ticket and you should be fine

> Norwegians tend to be more financially responsible

I'd say that's being responsible, period. A lot of Americans aren't

Re: Danes Get 20-Year 0% Mortgages

#269

Post by hocuspocus »

l33tbro wrote: post #224
izacus wrote: post #202

Earlier quoted context omitted.

> 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.

The volume tied to mortgages is high compared to other countries because you can essentially keep 2/3rd of the debt forever, and even more if you indirectly amortize through your pension fund.

Re: Danes Get 20-Year 0% Mortgages

#270

Post by nostrademons »

ryandrake wrote: post #257
DavidPeiffer wrote: post #240

Earlier quoted context omitted.

>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 stopped into a car dealer to look at a vehicle a couple years ago. I liked how it drove, could pay cash, but wasn't opposed to taking out a loan if I could get a better price overall (sometimes possible with fees banks pay to used dealers for getting a loan originated). In my experie…

Exact same experience here. The salesman (and his manager, lol) just couldn't grok that I don't care a shred about what monthly payment they can math their way into. I'm looking at the total price of the car. It was like we were speaking totally different languages. Even after I tried to explain it with "Let's assume I'm going to pay cash..." they kept trying to steer me into their finance department. Obviously they…

My wife and I always pay cash for cars. The last time we bought one, they looked at us like we were very weird for...well, having the cash to pay for a car.

Then again, we basically didn't go to a dealership other than for test drives. We e-mailed every dealer within an hour and a half of us with "This is exactly the make and model we want, these are the options, this is the color (but we're open to substitutions), what's your best price?" We took the lowest bid, and if there was any funny business (there was with one), we walked.

Most dealers now have online sales departments that are setup for these low-overhead but low-price transactions (this was a rarity when I bought mine in 2009). Apparently the sales guy we bought from sells 3x more cars than the next-best sales guy at the dealership, because he knows how to price the cars to move online and then acts straight & efficient when the buyer comes in.

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