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> He forced mortgage rates, for example, to shoot up to 15%, with crippling monthly payments for a large chunk of the population. While this may be true, it is
by jen20 5y ago
> He forced mortgage rates, for example, to shoot up to 15%, with crippling monthly payments for a large chunk of the population.
While this may be true, it is entirely the fault of the dumb UK mortgage market that does not provide for fixed-rate mortgages for the full term of the loan. In the US, 30 year fixed rates are the norm. In the UK you’re lucky to get 5 years fixed.
- NikolaNovak 5y agoInteresting. In Canada you can only get up to 5 years fixed typically. Mortgage itself is 25 years but terms change every 5 usually. 30y fixed feels... Crazy. How much above market does it have to be for banks to take that risk??
- makomk 5y agoThe banks don't take the risk of offering such long-term fixed rates. The US government does through Fannie Mae and Freddie Mac, effectively subsidising the mortgage market. Other countries don't do this and don't have the same kind of long-term fixed mortgages as a result.
- jen20 5y ago> The US government does through Fannie Mae and Freddie Mac, effectively subsidising the mortgage market. For so-called "conforming" loans (647k USD this year), the equivalent of which would be enough to buy a nice house almost anywhere in the UK except London, the nicer parts of the Home Counties or the South West.
- NikolaNovak 5y agoGeebus. How did I never pick up on that juicy tidbit during 2008 coverage. That's both awesome and insane
- vxNsr 5y agoPeople with a low risk profile today get 2-4% fixed rate. What’s it like in Canada?
- NikolaNovak 5y agoSimilar. But not for 30 freakin years - we all know rates will shoot up!
- deleted 5y ago[deleted]
- mvc 5y ago> While this may be true, it is entirely the fault of the dumb UK mortgage market How would raising interest rates affect spending in the short/medium term if loans are all fixed for 30 years? I guess maybe the property market is more volatile in the US as a result of this since who would take on a 30 year mortgage when rates are above their long-term average? In the UK, if you're on a high rate (but a short contract), you can at least look forward to when interest rates fall.
- jen20 5y ago> In the UK, if you're on a high rate (but a short contract), you can at least look forward to when interest rates fall. At the cost of never being able to predict your monthly outgoings in the face of turbulent financial markets.
- lacksconfidence 5y agoThe way it works where i live, at least, is on all loans the principal can be paid in full with no penalty. So I get a 30 year fixed loan and when a better rate becomes available I can get a new loan and pay off the old one. The down side is transaction costs, things are getting more efficient but the owner will have to pay something to refinance the loan.
- thaumasiotes 5y ago> While this may be true, it is entirely the fault of the dumb UK mortgage market that does not provide for fixed-rate mortgages for the full term of the loan. In the US, 30 year fixed rates are the norm. That's not an effect of the market; American 30-year fixed-rate mortgages reflect intense government involvement.
- jen20 5y agoAnyone who thinks the British government is not involved in the UK mortgage market is not paying attention.
- thaumasiotes 5y agoDid you mean to reply to someone else?
- zhte415 5y agoIt's an effective regressive tax where lower income earners subsidise middle and high income earners. Is that what you're arguing for?
- DangitBobby 5y agoWithout him, all of the quoted effects would not have happened, right? It actually took his direct action to catalyze those events into the stated negative outcomes. So how is it not at least partially (though actually mostly) his fault? If someone kills someone else, do you blame the murderer's mom for his existence, or Walmart for selling the knife, or do you blame the murderer for doing the stabbing?