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>> This makes me wonder if 30 year mortgages even end up making housing more affordable. Everything the government does to subsidize home-ownership ends up get
by bradleyjg 11y ago
>> This makes me wonder if 30 year mortgages even end up making housing more affordable.
Everything the government does to subsidize home-ownership ends up getting capitalized into home prices and so acts as a naked giveaway to incumbent homeowners and either does nothing for or actively hurts non-incumbents. Interventions breed more interventions as the prior ones no longer provide the above general inflation price growth that homeowners demand from their politicians. The 30 year low fixed rate mortgage with no prepayment penalty is just one among many such interventions.
- pc86 11y agoHow is a 30 year loan on what is usually the largest purchase of one's life a government intervention? Plenty of banks offer these loans with no backing, support, or encouragement from the government. And what do prepayment penalties have to do with anything? As a consumer I will absolutely not sign any loan that comes with a prepayment penalty. It would be idiotic to.
- jazzyk 11y agoThe government subsidizes housing through: - low interest rates (reduces interest payments) - tax deductions (mortgage interest payments, etc). Low interest rates, in particular, caused prices to rise dramatically, putting a lot of people in a lot of debt and making house ownership out of reach for many others.