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As an American I am absolutely shocked anybody thought that was a good idea. If an average person making $50k/year finds it affordable to pay $1200/month on hou
by opportune 9y ago
As an American I am absolutely shocked anybody thought that was a good idea. If an average person making $50k/year finds it affordable to pay $1200/month on housing, they're just going to shop for a house that will yield that desired monthly payment. When interest rates are low, how is this not a recipe for runaway housing costs?
What's worse is that this is actually a huge subsidy for landlords, unless their mortgage terms are limited to be much shorter. A landlord can afford the downpayment to finance many homes at low interest rates, whereas a poorer person may be able to make the payments on such a mortgage, but can't save up enough to afford a down payment.
- njarboe 9y ago"shocked"; a bit of sarcasm perhaps? A 30 year loan is not much different really. Too long. It was rare in the US before various government subsidies and encouragements. First, Fannie Mae (1938), securitizing FHA backed home mortgages. Next, Freddie Mac (1970), securitizing home loans not backed by the US government.
- opportune 9y agoShocked because it seems obvious to me that this would have undesirable effects down the road. It also funnels even more money into banks because the net effect is that homeowners are essentially renting from banks for most of their lives until they get a significant windfall. In the US, we saw what happens when you make getting a mortgage "easy". People bought more house than they could afford and got screwed.