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I disagree somewhat. I think the 30 year mortgage has pushed prices up much higher than they would have been, because of the leverage, and people only look at t

I disagree somewhat. I think the 30 year mortgage has pushed prices up much higher than they would have been, because of the leverage, and people only look at the monthly repayment. The fact that it has led to intergenerational wealth (among the rich who can afford houses) is a direct side effect of the fact that houses are so expensive. It seems like saying it has generated wealth is begging the question.

ghaff 4y ago
>people only look at the monthly repayment That's somewhat understandable given that the alternative is pretty much writing a monthly rent check. In that respect, it's a bit different to my mind than an auto loan. (Maybe if you compare it to a lease.) If you didn't have 30 year fixed mortgages in the US, property values might indeed drop somewhat. But it would mostly advantage people who had access to other capital. People who can't afford houses in expensive areas now mostly still wouldn't be able to.
jackcosgrove 4y ago
Canada has shorter mortgage terms that require multiple mortgages to pay off a house at different times, transferring interest rate risk to the buyer. Canada also has higher house prices than the US. Mortgage term length may contribute to price growth to some extent, but I think the supply of and demand for housing swamp any effects of financing. Being able to lock in a low interest rate for thirty years, the probable lifetime of the amortization period, is very advantageous. Combine this with a lack of a prepayment penalty and American mortgage holders get a great deal.
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