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>And you know what the easiest to obtain source of large amounts of long-maturity, fixed-rate debt in most countries is? Mortgages. The banks are going to pric

>And you know what the easiest to obtain source of large amounts of long-maturity, fixed-rate debt in most countries is? Mortgages. The banks are going to price in their forward expectations of inflation into their interest rates. They won't just hand you cheap money and eat it.

jjeaff 4y ago
Yes, but some of this is based on federal lending which cares more about stability of the loan rather than interest rate. Many banks don't care what the interest rate is because they are simply in it to collect the fees and then sell the mortgage to someone else like Fannie Mae and Freddie Mac.
- voisin 4y ago
  So then the taxpayer gets screwed?
  - to11mtm 4y ago
    Sometimes. In the case of FHA loans (which are the ones that taxpayers would be considered 'most on the hook for'), there has been a lot of reform around trying to avoid that scenario. Lenders get audited on underwriting more strictly than before. If it turns out a loan didn't meet guidelines, the lander may have to buy the loan back and/or pay penalties. Also, FHA's Mortgage insurance fund is in a much better spot thanks to rule changes around MIP (FHA's equivalent to Conventional PMI.) Last report I think they had 1.2T to cover losses in value with that fund. That's about 10% of -all- household debt in the country.
- SantalBlush 4y ago
  Do you have a list of some of those banks? I'd love to get a 1% rate.