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It's interesting that this topic becomes a source of populist rage, because the whole mechanism is that buyers are indifferent to principal vs. interest. The sa
by closeparen 5y ago
It's interesting that this topic becomes a source of populist rage, because the whole mechanism is that buyers are indifferent to principal vs. interest. The same cheap loans are available to you too. Interest rates are probably not driving your inability to afford a house.
I suppose you could be a cash buyer, whose cash was not previously exposed to real estate, hoping to get into it. But that's a pretty niche constituency.
- bronzeage 5y ago"pretty niche consistency"?! only nearly every single young family! These interest rates directly lead to modern feudalism. To have social mobility it's essential that housing market is possible to enter from the outside. What we have now is increasingly feudal system where the landlords can demand much more money because in order to buy yourself you have to compete with other fellow buyers who are also given an option to take increasingly leveraged mortgage. You're both fucked in a prisoners dilemma where the only winner is the seller and already existing landlords. As a buyer of an item which people usually spend most of their savings on, it is against your interests that everyone would be allowed to take a loan. When everyone can take a loan, everyone pays more, whereas when nobody can take a loan, everyone would just pay less - as much as they currently have.
- angmarsbane 5y agoThe way I view it is that low interest means I’m competing with how much the guy next to me is willing to borrow (how reckless he’s willing to be) not how much he can afford.
- closeparen 5y agoAre you comparing this to some time in the past when people paid for houses outright? When was that time? As far as I know housing has "always" been based on monthly earning power and not on accumulated savings.