5 ms·

I’m trying to understand how would it work for mortgages. I guess that you have no fixed interest mortgages and they are all tied to the inflation rate + some s

I’m trying to understand how would it work for mortgages. I guess that you have no fixed interest mortgages and they are all tied to the inflation rate + some spread, otherwise I don’t see how the banks would want to lend you money for a house.

marcosdumay 5y ago
Everything is linked to the inflation rate. Fixed interest lending does not exist at all. Even then long term lending can easily go both ways, and become too cheap or too expensive very quickly. (I lived my childhood with hyperinflation, not in Argentina, but that doesn't actually change from one place to another.)
- ed25519FUUU 5y ago
  Variable rate loans make a lot of sense. It’s still strange to me that in the USA I can get a 30 year FIXED mortgage at 2.75% when inflation was 7%. Makes “inflated” housing look cheap. Doesn’t really make sense that it’s even offered.
  - dragonwriter 5y ago
    > It’s still strange to me that in the USA I can get a 30 year FIXED mortgage at 2.75% when inflation was 7%. A variable 2.75% with inflation at an unusually high 7% would be weirder than a fixed; a variable rate loan has a rate based on current conditions, a fixed rate loan has rated based on expectations over the lifetime of the loan (both in terms of value of money and risk of loss.) Now, it may seem weird that you can get a 30-year fixed loan at all, but once you accept that, having the rate below current inflation when inflation has been at a unusually high level for a shirt period of time isn't particularly odd.
    - rndphs 5y ago
      I think you can usually refinance a fixed rate mortgage to an adjustable rate one at any point. Or refinance to a different fixed rate one with lower rates if the opportunity arises.
    - ethbr0 5y ago
      > ... a fixed rate loan has rated based on expectations over the lifetime of the loan (both in terms of value of money and risk of loss.) Is that accurate to say? Because I don't think so. It seems more accurate to say mortgage rates for fixed loans are set by the cost of money at purchase / loan-initiation time. Which makes sense, as that's when funds are actually changing hands (from purchaser's lender to seller). And ultimately, that's banks' cost of money, which means then-current Fed rate + spread, no?
  - JumpCrisscross 5y ago
    > Doesn’t really make sense that it’s even offered. Nobody serious is betting inflation will remain at 7%. That was an annualised rate from a single reading.
  - nsv 5y ago
    You can get these low interest rates because the government subsidises them. If it were a "free market" so to speak you would not be able to get such a rate, and possibly would not be able to get a fixed-rate mortgage at all.
tute666 5y ago
Argentinian here. Personal credit lines are almost nonexistent or have rates which supercede inflation, (inflation+10% is not out of the ordinary). Credit card yearly interest rate for 2 years ago was >= 70% There are preeexisting credit lines for property, but they are government subsidied mortgages with very a specific target audience. ie: salaried mid income families looking to buy their first property.
Izikiel43 5y ago
> how would it work for mortgages That's Argentina's secret, there are no mortgages, properties are bought in cash.
nick_meister 5y ago
Argentinian here, I built my house about 10 years ago with a fixed rate mortgage subsidized by the government. It was subsidized only for people that didn't own a house already. It was a 16 years mortgage. First year I paid about the same as someone renting a house. Past year I was paying about only 10 dollars per month, so I cancelled it :) But yeah, as far as I know, at the moment there are no fixed rate mortgages.
sbassi 5y ago
mostly they don't
marianov 5y ago
Most properties are bought cash. That's dollar bills, no bank transfer, no pesos.

marcosdumay 5y ago

Everything is linked to the inflation rate. Fixed interest lending does not exist at all. Even then long term lending can easily go both ways, and become too cheap or too expensive very quickly. (I lived my childhood with hyperinflation, not in Argentina, but that doesn't actually change from one place to another.)

ed25519FUUU 5y ago
Variable rate loans make a lot of sense. It’s still strange to me that in the USA I can get a 30 year FIXED mortgage at 2.75% when inflation was 7%. Makes “inflated” housing look cheap. Doesn’t really make sense that it’s even offered.
- dragonwriter 5y ago
  > It’s still strange to me that in the USA I can get a 30 year FIXED mortgage at 2.75% when inflation was 7%. A variable 2.75% with inflation at an unusually high 7% would be weirder than a fixed; a variable rate loan has a rate based on current conditions, a fixed rate loan has rated based on expectations over the lifetime of the loan (both in terms of value of money and risk of loss.) Now, it may seem weird that you can get a 30-year fixed loan at all, but once you accept that, having the rate below current inflation when inflation has been at a unusually high level for a shirt period of time isn't particularly odd.
  - rndphs 5y ago
    I think you can usually refinance a fixed rate mortgage to an adjustable rate one at any point. Or refinance to a different fixed rate one with lower rates if the opportunity arises.
  - ethbr0 5y ago
    > ... a fixed rate loan has rated based on expectations over the lifetime of the loan (both in terms of value of money and risk of loss.) Is that accurate to say? Because I don't think so. It seems more accurate to say mortgage rates for fixed loans are set by the cost of money at purchase / loan-initiation time. Which makes sense, as that's when funds are actually changing hands (from purchaser's lender to seller). And ultimately, that's banks' cost of money, which means then-current Fed rate + spread, no?
- JumpCrisscross 5y ago
  > Doesn’t really make sense that it’s even offered. Nobody serious is betting inflation will remain at 7%. That was an annualised rate from a single reading.
- nsv 5y ago
  You can get these low interest rates because the government subsidises them. If it were a "free market" so to speak you would not be able to get such a rate, and possibly would not be able to get a fixed-rate mortgage at all.

tute666 5y ago

Argentinian here. Personal credit lines are almost nonexistent or have rates which supercede inflation, (inflation+10% is not out of the ordinary). Credit card yearly interest rate for 2 years ago was >= 70% There are preeexisting credit lines for property, but they are government subsidied mortgages with very a specific target audience. ie: salaried mid income families looking to buy their first property.

Izikiel43 5y ago

> how would it work for mortgages That's Argentina's secret, there are no mortgages, properties are bought in cash.

nick_meister 5y ago

Argentinian here, I built my house about 10 years ago with a fixed rate mortgage subsidized by the government. It was subsidized only for people that didn't own a house already. It was a 16 years mortgage. First year I paid about the same as someone renting a house. Past year I was paying about only 10 dollars per month, so I cancelled it :) But yeah, as far as I know, at the moment there are no fixed rate mortgages.

sbassi 5y ago

mostly they don't

marianov 5y ago

Most properties are bought cash. That's dollar bills, no bank transfer, no pesos.