5 ms·

~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.
      - mysterydip 4y ago
        Ah thanks for the clarification!
      - GekkePrutser 4y ago
        In Spain too.
- CapricornNoble 4y ago
  Also Japanese mortgages are 30 years, or even 50 years. But the interest rates are <1% here.
  - ethbr0 4y ago
    But doesn't Japan also have some weird customs/rules around housing stock age? I remember reading that most things get torn down and rebuilt at 20(?) years max for {reasons}?
    - bobthepanda 4y ago
      In previous generations it was because - there was a postwar housing shortage, so the housing quality that came up to meet that demand quickly was not good. even if the house is still maintained well (a later point), japan has seen meteoric rises with living standards over the past 100 years, so it probably isn't compatible with modern wants and needs - Japanese earthquake codes were regularly revised until 1981 after lessons learned from disasters. buildings from before that time have a significantly higher rate of collapse during earthquakes, so buying one and keeping it is a bit of a gamble on your life - because of the depreciation, there isn't a lot of incentive to maintain your house well to the point where it can last more than 30 years of course, all these things might be less true now that Japan has stagnated since the '90s, so there are reports of more people accepting renovating a house they buy rather than tearing down.
      - ethbr0 4y ago
        That explains it! I hadn't thought about the systemic flywheel caused by real estate valuations. Where if depreciation is a market assumption, values depreciate, which impacts financing options. And people expect values to depreciate, so people don't maintain and renovate, which ultimately fulfills the depreciation prophecy.
        bobthepanda 4y ago
        This systemic expectation also has other effects. - construction is really big business in Japan, and as a result has deep ties to politics and is a usual beneficiary of Japanese stimulus programs (of which there have been many, since Japan has tried and failed at spending its way out of deflation) - NIMBYism on buildings is much lower than in the US or Europe, due to the expectation that they are temporary - because of the lack of NIMBYism, Japanese architects get a lot of leeway to build cutting edge projects, and so are very well represented in the world of star-chitecture
WheatM 4y ago
30 year mortgage are normal in New Zealand and Australia, as well as the UK and at least some parts of Europe.
- robocat 4y ago
  You are confusing a “30 year mortgage” with a “30 year mortgage”. They sound the same, because they have the same term to repay the principal, but they are completely different because in the USA you usually know your repayments for the next 30 years, but in many other countries the repayments can go up a lot if interest rates rise. In the USA, the usual mortgage has a fixed interest rate for the term of the mortgage. In New Zealand the interest rate is approximately a floating (edit:variable) rate over the 30 year period. In NZ the mortgage interest rate (which controls your repayments) can be fixed for up to 5 years (the median is 2) but after the “fixed” period the interest rate resets to the current interest rates (edit: typically mortgagees lock in a new 2 year “fixed” rate at the current 2 year interest rate). NZ rates were around 2% to 3% since 2008 [1], but now they are closer to 6% [2] and most mortgage holders in New Zealand will have to pay twice as much for the interest component of their mortgage repayment, putting some people under financial stress (an acquaintance is being forced to sell an investment property because they were over-leveraged). The mortgage interest rate over the 30 year term is more of a stepwise approximation to the floating interest rate: I am unsure how much control the mortgage holder has over varying the principal repayments (I think I can pay 20% more principal per payment, shortening 30 year term to 24 years). It is more complicated than that, and the USA has a wide variety of mortgage products you can buy including ones similar to NZ (not just the usual USA fixed rate 30 year). Other countries have their own quirks, so I am only speaking for NZ where I understand the details better. [1] https://tradingeconomics.com/new-zealand/interest-rate https://tradingeconomics.com/new-zealand/interest-rate [2] https://www.interest.co.nz/borrowing https://www.interest.co.nz/borrowing
  - viraptor 4y ago
    > confusing a “30 year mortgage” with a “30 year mortgage” No need for confusing naming. You're talking about fixed rate, variable rate and short period fixed rate mortgages.

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.
    - mysterydip 4y ago
      Ah thanks for the clarification!
    - GekkePrutser 4y ago
      In Spain too.
CapricornNoble 4y ago
Also Japanese mortgages are 30 years, or even 50 years. But the interest rates are <1% here.
- ethbr0 4y ago
  But doesn't Japan also have some weird customs/rules around housing stock age? I remember reading that most things get torn down and rebuilt at 20(?) years max for {reasons}?
  - bobthepanda 4y ago
    In previous generations it was because - there was a postwar housing shortage, so the housing quality that came up to meet that demand quickly was not good. even if the house is still maintained well (a later point), japan has seen meteoric rises with living standards over the past 100 years, so it probably isn't compatible with modern wants and needs - Japanese earthquake codes were regularly revised until 1981 after lessons learned from disasters. buildings from before that time have a significantly higher rate of collapse during earthquakes, so buying one and keeping it is a bit of a gamble on your life - because of the depreciation, there isn't a lot of incentive to maintain your house well to the point where it can last more than 30 years of course, all these things might be less true now that Japan has stagnated since the '90s, so there are reports of more people accepting renovating a house they buy rather than tearing down.
    - ethbr0 4y ago
      That explains it! I hadn't thought about the systemic flywheel caused by real estate valuations. Where if depreciation is a market assumption, values depreciate, which impacts financing options. And people expect values to depreciate, so people don't maintain and renovate, which ultimately fulfills the depreciation prophecy.
      - bobthepanda 4y ago
        This systemic expectation also has other effects. - construction is really big business in Japan, and as a result has deep ties to politics and is a usual beneficiary of Japanese stimulus programs (of which there have been many, since Japan has tried and failed at spending its way out of deflation) - NIMBYism on buildings is much lower than in the US or Europe, due to the expectation that they are temporary - because of the lack of NIMBYism, Japanese architects get a lot of leeway to build cutting edge projects, and so are very well represented in the world of star-chitecture

WheatM 4y ago

30 year mortgage are normal in New Zealand and Australia, as well as the UK and at least some parts of Europe.

robocat 4y ago
You are confusing a “30 year mortgage” with a “30 year mortgage”. They sound the same, because they have the same term to repay the principal, but they are completely different because in the USA you usually know your repayments for the next 30 years, but in many other countries the repayments can go up a lot if interest rates rise. In the USA, the usual mortgage has a fixed interest rate for the term of the mortgage. In New Zealand the interest rate is approximately a floating (edit:variable) rate over the 30 year period. In NZ the mortgage interest rate (which controls your repayments) can be fixed for up to 5 years (the median is 2) but after the “fixed” period the interest rate resets to the current interest rates (edit: typically mortgagees lock in a new 2 year “fixed” rate at the current 2 year interest rate). NZ rates were around 2% to 3% since 2008 [1], but now they are closer to 6% [2] and most mortgage holders in New Zealand will have to pay twice as much for the interest component of their mortgage repayment, putting some people under financial stress (an acquaintance is being forced to sell an investment property because they were over-leveraged). The mortgage interest rate over the 30 year term is more of a stepwise approximation to the floating interest rate: I am unsure how much control the mortgage holder has over varying the principal repayments (I think I can pay 20% more principal per payment, shortening 30 year term to 24 years). It is more complicated than that, and the USA has a wide variety of mortgage products you can buy including ones similar to NZ (not just the usual USA fixed rate 30 year). Other countries have their own quirks, so I am only speaking for NZ where I understand the details better. [1] https://tradingeconomics.com/new-zealand/interest-rate https://tradingeconomics.com/new-zealand/interest-rate [2] https://www.interest.co.nz/borrowing https://www.interest.co.nz/borrowing
- viraptor 4y ago
  > confusing a “30 year mortgage” with a “30 year mortgage” No need for confusing naming. You're talking about fixed rate, variable rate and short period fixed rate mortgages.