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Right, US mortgages are not portable. Going back to the Canadian mortgages, they have terms of 5-10 years but they can be amortized over up to 25 years. So the
by ak217 4y ago
Right, US mortgages are not portable.
Going back to the Canadian mortgages, they have terms of 5-10 years but they can be amortized over up to 25 years. So their standard practice is effectively a balloon payment of up to 80% that is expected to be refinanced at rates in effect at the end of the term. This still financializes housing over up to 25 years (similar to the US) but without subsidizing the interest rate optionality.
In the US, balloon payments are heavily discouraged by federal regulation on what kinds of mortgages can be financially supported by the government.
- kelnos 4y agoAh, that makes a lot of sense. So the monthly payments are still affordable, and people mostly avoid the balloon-like payments by refinancing. The downside (for the borrower, anyway), of course, is that if you do live in the same house long-term, you'll have more-frequent forced refinancing events that might result in an unfavorable interest rate. But that otherwise seems pretty reasonable, and arguably (as the article you linked points out), the ability to "lock" your interest rate for such a long time isn't great for the market.