7 ms·

>get it paid back in the NEXT 30 YEARS Why emphasize that? 30 year mortgages are common in the US. At current rates of 5.5%, the total paid in interest will be

>get it paid back in the NEXT 30 YEARS Why emphasize that? 30 year mortgages are common in the US. At current rates of 5.5%, the total paid in interest will be bigger than the original loan. Of course, most US mortgages are taken out on housing units that actually exist.

ganyu 4y ago
What's the household leverage ratio there in US? That in CN is 72% in 22Q1, and even bigger in big cities. Edit: CN definition: (household leverage ratio) = (mortgages paid in 22Q1) / (total disposable income in 22Q1)
- HPsquared 4y ago
  What ratio is that measuring, loan-to-value or loan-to-income? In the UK at least, a buyer can borrow up to 95% of the home's value and I think 4 or 4.5x the borrower's annual income.
- ganyu 4y ago
  +HPSquared For total value it's up to 80%, and when comparing to income you can borrow up to 50% of the (before tax) monthly income, for up to 30 years.
kevinventullo 4y ago
I agree with you, and just wanted to add that saying one pays “more” in interest than the original loan value is implicitly ignoring the time value of money, in particular equating 2022 currency with 2052 currency.
- jollybean 4y ago
  That's a valid point, but it's not hugely relevant to the situation, as all loans come with interest payments and loans over 30 years at ~6% or whatever will accumulate a lot of interest. It's something to talk about, but another thing altogether. The mechanics of this are a bit scary, I wonder how much real data there is on it. Paradoxically, if it were the US, it would be so bad it may wipe out the nation. But Xi has the Central Banks politicized fully ... he can make currency worth whatever he wants. He has to reallocate/rebalance without causing a revolution. And if it does get bad, they may try to start a war as a distraction. That sounds extremely cynical but it's a real thing that happens.
  - imtringued 4y ago
    Isn't it odd that money rules governments? It almost as if the government is just a lapdog for someone else.
    - krsrhe 4y ago
ganyu 4y ago
30 years are pretty common, but paying for some property that never came out of the blueprint (and seemingly never will) does sound a bit odd..
- dirtyid 4y ago
  Preconstruction sells at 30% discount, people gamble with their life savings considering PRC housing prices to income, but flip side is also massive speculative profit if things work out.
  - civilized 4y ago
    Ah, so this is just crypto and ICOs. But at least you get rights to real physical property instead of virtual Pokemon cards.
    - chaostheory 4y ago
      Well, the CCP owns the land. At best they only lease it for a max of about 75 years give or take.
      - civilized 4y ago
        Somebody else posted that they tried to make renewal of the lease conditional on payments but backed down in the face of protests.
unicornmama 4y ago
~96% of us humans don't live in America, most of us don't have 30 year mortgages.
- thriftwy 4y ago
  I'm pretty sure large portions of Latin America, Europe, ex-USSR and perhaps India/South East Asia have 30 year mortgages.
  - unicornmama 4y ago
    No we don’t. You get 5 year fixed, 10 year max. Beyond is prohibitively expensive.
    - thriftwy 4y ago
      How expensive are we talking about? Of course people tend to pay mortgage early to avoid paying many times over at 10%. But, having small montly payment helps in case you have some temporary financial emergency.
    - mysterydip 4y ago
      Just curious what your monthly payments are like compared to your income.
      - refurb 4y ago
        I think people are confused by the term (length of fixed rate) versus amortization (total time to pay off debt). In Canada mortgages are typically 25 or 30 year amortization periods, but you can only fix the rate for 10 years (usually less as you get a much lower rate). After the 5 years you renew your mortgage at the current interest rate with the same bank, or try and refinance entirely which requires the same paperwork as a new mortgage. The US and I believe Netherlands are the rare countries where you can get fixed rate for the entire 30 year amortization period.
        4y ago
Animats 4y ago
> Of course, most US mortgages are taken out on housing units that actually exist. Construction is usually financed by a construction loan, at a higher rate than a mortgage, and the builder is the borrower. But not always. Here are some US failures from the 2008 housing crash.[1] China has an unusual problem - the Party really, really doesn't like elections. For anything. But China has buyable apartments, which work like condominiums. Some organization has to run the building and maintain the common areas. That led to the creation of homeowners' associations with elected officials. This got party officials upset, and now efforts are being made to make HOAs subordinate to the local Communist Party units.[2] [1] https://www.mortgagefit.com/construction/loan-default.html https://www.mortgagefit.com/construction/loan-default.html [2] https://ebrary.net/153835/law/condominium_china https://ebrary.net/153835/law/condominium_china
- deleted 4y ago
  [deleted]
- theplumber 4y ago
  [flagged]
  - dylan604 4y ago
    I don't know, I'd be willing to guess that the majority of developers in the US would love to be able to do this very kind of ponzi scheme as accepted and gov't approved business model
    - mminer237 4y ago
      Uh, I've never had an American property developer say how he wishes the HOA could just be part of the Democrat/Republican party.
      - dylan604 4y ago
        Huh? I'm talking about taking money from you as a "deposit" so that he can finish building my house or buying the property for another person altogether with gov't approval yet no oversight on how the money is spent
bobthepanda 4y ago
The other difference is that the vast majority of US mortgages are insured by FHA and so are actually fairly cheap. It’s probably the single biggest market distortion in the housing market. Most countries do not have this.
onetokeoverthe 4y ago
paganel 4y ago
> Of course, most US mortgages are taken out on housing units that actually exist. To add to that, taking a mortgage for a house that doesn't already exist is a very used practice outside of China, too, I know over here in Romania lots of people do it. It's called credit for "casa la rosu", basically all you need to show to the bank is a contract between you and the developer and a "registration" thingie for the house in question with the local city-hall (again, even if the house doesn't already exist, in practice). It comes with a price discount (I haven't kept up, I think it's in the 20-30% range, maybe bigger) but, of course, it's all very risky (or at least that's my opinion). That hasn't stopped lots and lots of people from taking those type of mortgages.
- inglor_cz 4y ago
  I also bought a house recently in very early stages of construction (a year ago, now it is almost finished). In Czechia. The difference is that the developer must be reputable and the price is actually paid in several tranches, as the construction passes defined milestones. The bank will require independent assessments of the state of construction before approving any partial payment. But yeah, it is still risky. You need to contribute at least 20 per cent of your own funds as a downpayment, and the downpayment is paid first. I wouldn't dare do that with an unknown developer. I risked it with a corporation that has been in operation since 1998 and has a lot of references.

ganyu 4y ago

What's the household leverage ratio there in US? That in CN is 72% in 22Q1, and even bigger in big cities. Edit: CN definition: (household leverage ratio) = (mortgages paid in 22Q1) / (total disposable income in 22Q1)

HPsquared 4y ago
What ratio is that measuring, loan-to-value or loan-to-income? In the UK at least, a buyer can borrow up to 95% of the home's value and I think 4 or 4.5x the borrower's annual income.
ganyu 4y ago
+HPSquared For total value it's up to 80%, and when comparing to income you can borrow up to 50% of the (before tax) monthly income, for up to 30 years.

kevinventullo 4y ago

I agree with you, and just wanted to add that saying one pays “more” in interest than the original loan value is implicitly ignoring the time value of money, in particular equating 2022 currency with 2052 currency.

jollybean 4y ago
That's a valid point, but it's not hugely relevant to the situation, as all loans come with interest payments and loans over 30 years at ~6% or whatever will accumulate a lot of interest. It's something to talk about, but another thing altogether. The mechanics of this are a bit scary, I wonder how much real data there is on it. Paradoxically, if it were the US, it would be so bad it may wipe out the nation. But Xi has the Central Banks politicized fully ... he can make currency worth whatever he wants. He has to reallocate/rebalance without causing a revolution. And if it does get bad, they may try to start a war as a distraction. That sounds extremely cynical but it's a real thing that happens.
- imtringued 4y ago
  Isn't it odd that money rules governments? It almost as if the government is just a lapdog for someone else.
  - krsrhe 4y ago

ganyu 4y ago

30 years are pretty common, but paying for some property that never came out of the blueprint (and seemingly never will) does sound a bit odd..

dirtyid 4y ago
Preconstruction sells at 30% discount, people gamble with their life savings considering PRC housing prices to income, but flip side is also massive speculative profit if things work out.
- civilized 4y ago
  Ah, so this is just crypto and ICOs. But at least you get rights to real physical property instead of virtual Pokemon cards.
  - chaostheory 4y ago
    Well, the CCP owns the land. At best they only lease it for a max of about 75 years give or take.
    - civilized 4y ago
      Somebody else posted that they tried to make renewal of the lease conditional on payments but backed down in the face of protests.

unicornmama 4y ago

~96% of us humans don't live in America, most of us don't have 30 year mortgages.

thriftwy 4y ago
I'm pretty sure large portions of Latin America, Europe, ex-USSR and perhaps India/South East Asia have 30 year mortgages.
- unicornmama 4y ago
  No we don’t. You get 5 year fixed, 10 year max. Beyond is prohibitively expensive.
  - thriftwy 4y ago
    How expensive are we talking about? Of course people tend to pay mortgage early to avoid paying many times over at 10%. But, having small montly payment helps in case you have some temporary financial emergency.
  - mysterydip 4y ago
    Just curious what your monthly payments are like compared to your income.
    - refurb 4y ago
      I think people are confused by the term (length of fixed rate) versus amortization (total time to pay off debt). In Canada mortgages are typically 25 or 30 year amortization periods, but you can only fix the rate for 10 years (usually less as you get a much lower rate). After the 5 years you renew your mortgage at the current interest rate with the same bank, or try and refinance entirely which requires the same paperwork as a new mortgage. The US and I believe Netherlands are the rare countries where you can get fixed rate for the entire 30 year amortization period.
      - 4y ago

Animats 4y ago

> Of course, most US mortgages are taken out on housing units that actually exist. Construction is usually financed by a construction loan, at a higher rate than a mortgage, and the builder is the borrower. But not always. Here are some US failures from the 2008 housing crash.[1] China has an unusual problem - the Party really, really doesn't like elections. For anything. But China has buyable apartments, which work like condominiums. Some organization has to run the building and maintain the common areas. That led to the creation of homeowners' associations with elected officials. This got party officials upset, and now efforts are being made to make HOAs subordinate to the local Communist Party units.[2] [1] https://www.mortgagefit.com/construction/loan-default.html https://www.mortgagefit.com/construction/loan-default.html [2] https://ebrary.net/153835/law/condominium_china https://ebrary.net/153835/law/condominium_china

deleted 4y ago
[deleted]
theplumber 4y ago
[flagged]
- dylan604 4y ago
  I don't know, I'd be willing to guess that the majority of developers in the US would love to be able to do this very kind of ponzi scheme as accepted and gov't approved business model
  - mminer237 4y ago
    Uh, I've never had an American property developer say how he wishes the HOA could just be part of the Democrat/Republican party.
    - dylan604 4y ago
      Huh? I'm talking about taking money from you as a "deposit" so that he can finish building my house or buying the property for another person altogether with gov't approval yet no oversight on how the money is spent

bobthepanda 4y ago

The other difference is that the vast majority of US mortgages are insured by FHA and so are actually fairly cheap. It’s probably the single biggest market distortion in the housing market. Most countries do not have this.

onetokeoverthe 4y ago

paganel 4y ago

> Of course, most US mortgages are taken out on housing units that actually exist. To add to that, taking a mortgage for a house that doesn't already exist is a very used practice outside of China, too, I know over here in Romania lots of people do it. It's called credit for "casa la rosu", basically all you need to show to the bank is a contract between you and the developer and a "registration" thingie for the house in question with the local city-hall (again, even if the house doesn't already exist, in practice). It comes with a price discount (I haven't kept up, I think it's in the 20-30% range, maybe bigger) but, of course, it's all very risky (or at least that's my opinion). That hasn't stopped lots and lots of people from taking those type of mortgages.

inglor_cz 4y ago
I also bought a house recently in very early stages of construction (a year ago, now it is almost finished). In Czechia. The difference is that the developer must be reputable and the price is actually paid in several tranches, as the construction passes defined milestones. The bank will require independent assessments of the state of construction before approving any partial payment. But yeah, it is still risky. You need to contribute at least 20 per cent of your own funds as a downpayment, and the downpayment is paid first. I wouldn't dare do that with an unknown developer. I risked it with a corporation that has been in operation since 1998 and has a lot of references.