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Mortgage interest rates are close to yearly inflation. Soon it’ll be free money to own Realestate, even if it’s not cash flow positive. We could see a huge run
by baskire 6y ago
Mortgage interest rates are close to yearly inflation. Soon it’ll be free money to own Realestate, even if it’s not cash flow positive.
We could see a huge run up of property values as people shift to taking advantage of real estate leverage and tax advantages coupled with literally free money.
- baconandeggs 6y agoLiterally free money only to those with access to cheap credit, increasing the wealth gap even more.
- breckenedge 6y agoSome markets are artificially limited. In Texas you can only mortgage, by law, somewhere around $600k. Beyond that you have to get a “jumbo” loan that is at a higher interest rate. Curious to see if that limit gets conveniently repealed.
- lotsofpulp 6y agoI don't think there's any law in Texas about mortgage size. What you may be referring to are the parameters of a "conforming" home mortgage loan. https://en.wikipedia.org/wiki/Conforming_loan https://en.wikipedia.org/wiki/Conforming_loan Conforming loans are subsidized by the US federal government because the US federal government buys them and so funding for them is basically limitless.
- breckenedge 6y agoYou're right, thanks for the link! $424k is the cutoff for a jumbo loan in Texas.
- havetocharge 6y agoIsn't inflation going to cause an increase in mortgage rates, and effectively push real estate prices down, rather than up?
- baskire 6y agoInflation means that prices go up. Mortgage rates for conforming loans are a few points higher than fed rate. That’s cause the government owns the actual loan.