4 ms·

That's pretty unique to the US, I think. Canada has no comparable product and the difference between "fixed" and "variable rate" mortgages here is that fixed mo

That's pretty unique to the US, I think. Canada has no comparable product and the difference between "fixed" and "variable rate" mortgages here is that fixed mortgages are fixed for five years.

beebmam 5y ago
Those used to be much more common in the US. The 2008 housing crisis changed everything, and variable rate mortgages are extraordinarily rare now.
- inglor_cz 5y ago
  Interestingly, I never saw a fixed rate mortgage for 30 years in my country. The top fixation period is usually 10 years, anything higher than that is unusual. A typical value is 5 years.
- jjav 5y ago
  Main factor is that interest rates are so low (and have been for years now). With very low interest rates, it would be foolish to get an adjustable rate mortgage since it only has room to go up. Much better to lock in the very low rate for life. Thus, approximate nobody takes variable rate loans anymore. When I first bought my house interest rates were over 7%, so getting discount on the interest in exchange of the risk of an adjustable rate mortgage made some sense.
- dragonwriter 5y ago
  > Those used to be much more common in the US Only briefly; the 30 year fixed has been a norm for a very long time, and the expansion of ARMs and more exotic creative financing instruments in the bubble leading up to the 2008 finance crises was itself a short-term aberration; there was also a brief run up in popularity when interest rates spiked in the 1980s (to avoid locking in sky-high rates.)
namdnay 5y ago
Not unique, standard in several European countries I’ve lived in too
rufus_foreman 5y ago
Adjustable rate mortgages (ARMs) weren't even available in the US until 1982, Congress didn't allow them. They're still around, the type you describe is a 5/1 ARM. Fixed rate for 5 years, adjusts every year after that. 3, 5, 7, and 10 year ARMs are common. A 5/1 loan rate is about 1% lower than a 30 year fixed now. It doesn't make much sense to me to take the risk with rates as low as they are now.

That's pretty unique to the US, I think. Canada has no comparable product and the difference between "fixed" and "variable rate" mortgages here is that fixed mortgages are fixed for five years.

beebmam 5y ago

Those used to be much more common in the US. The 2008 housing crisis changed everything, and variable rate mortgages are extraordinarily rare now.

inglor_cz 5y ago
Interestingly, I never saw a fixed rate mortgage for 30 years in my country. The top fixation period is usually 10 years, anything higher than that is unusual. A typical value is 5 years.
jjav 5y ago
Main factor is that interest rates are so low (and have been for years now). With very low interest rates, it would be foolish to get an adjustable rate mortgage since it only has room to go up. Much better to lock in the very low rate for life. Thus, approximate nobody takes variable rate loans anymore. When I first bought my house interest rates were over 7%, so getting discount on the interest in exchange of the risk of an adjustable rate mortgage made some sense.
dragonwriter 5y ago
> Those used to be much more common in the US Only briefly; the 30 year fixed has been a norm for a very long time, and the expansion of ARMs and more exotic creative financing instruments in the bubble leading up to the 2008 finance crises was itself a short-term aberration; there was also a brief run up in popularity when interest rates spiked in the 1980s (to avoid locking in sky-high rates.)

namdnay 5y ago

Not unique, standard in several European countries I’ve lived in too

rufus_foreman 5y ago

Adjustable rate mortgages (ARMs) weren't even available in the US until 1982, Congress didn't allow them. They're still around, the type you describe is a 5/1 ARM. Fixed rate for 5 years, adjusts every year after that. 3, 5, 7, and 10 year ARMs are common. A 5/1 loan rate is about 1% lower than a 30 year fixed now. It doesn't make much sense to me to take the risk with rates as low as they are now.