6 ms·

Where are you at? I ask because I have 2 mortgages and a car loan in the US and 2 are fixed rate for the entire lifetime of the loan and 1 I have 10 years unti

by mrep 4y ago

Where are you at? I ask because I have 2 mortgages and a car loan in the US and 2 are fixed rate for the entire lifetime of the loan and 1 I have 10 years until the ARM starts applying so I'm laughing all the way to the bank. 90% of US mortgages are fixed for the entire loan.

Syonyk 4y ago
I'm in the US. I certainly could do something like that. I just won't. I hope it works for you. That's a level of debt-based risk that neither myself nor my wife have any interest in. There have been a lot of people throughout history who thought similar arrangements were "sure things," and they were, up until they weren't and it all came down around their ankles. We live in a very modest (manufactured, gasp!) home for our income, our "new" car is a decade old, with other vehicles ranging far older (the tractor is about 80), but still maintained in perfectly good condition and they all do exactly what we ask of them. Mostly. One of the Urals got demanding lately. It's low stress and high slack/flexibility. Those seem useful to us.
- mrep 4y ago
  2/3 of my debt payments are a sure thing as they are fixed and inflation is also a sure thing as deflation is catastrophic so governments won't allow it and deflation is trivially easy to fix with helicopter money. The only thing that isn't a sure thing are wages but they have over the long term gone up [0] and when they do go down it is usually only for a few years. The last one is a risk but I think it is well worth the risk. [0]: https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N
  - deleted 4y ago
    [deleted]
  - junofan 4y ago
    I mean the bank took on the risk instead of you, and the bank owns your house. So… sure thing?
- maxerickson 4y ago
  Concern over US natural gas supply is not warranted. At all. If producers decided not to produce during a period of high prices (unlikely), we have gas in storage, right now, to last through the typical winter. https://ir.eia.gov/ngs/ngs.html https://ir.eia.gov/ngs/ngs.html (unfortunately, export capacity is a rounding error, so we can't do a whole lot to help Europe out. https://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm https://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm )
  - Syonyk 4y ago
    > Concern over US natural gas supply is not warranted. At all. How'd that work for Texas a couple winters ago? Or a decade ago? Supply is more than just what's in the ground - it's the entire infrastructure related to delivering it to the various loads, and we've demonstrated at various points that it's not in as good of shape as people like to assume. Also, someone is literally blowing up pipelines over in Europe. Don't think US infrastructure is better guarded. If you don't think it's an issue, great. Hopefully you're right. If you're wrong, hopefully the outages are short lived. Because otherwise people die.
    - Spooky23 4y ago
      Texas is a broken theocracy. Cold places have pretty robust gas infrastructure, but cannot grow it because of the green people with gas heat who want all new installs to be heat pumps.
      - deleted 4y ago
        [deleted]
    - ajross 4y ago
      Texas didn't suffer a gas shortage? There was a weather-caused generation capacity crisis, which is a rather different resource. Is that what you're thinking about?
- Spooky23 4y ago
  You do you. But assets like real property are historically good investments. It doesn’t make sense to not buy the best house you can afford. I’m with you with cars… but even then the maintenance expense starts to catch up.
  - csomar 4y ago
    > But assets like real property are historically good investments. This is wrong and might be misleading for some people. Real-estate where you live is certainly a good investment (if you are planning to live there). However, real-estate is a risky investment. I have passed through lots of abandoned commercial and residential buildings now that I'm pretty sure I'm never going to invest in real-estate.
  - sidewndr46 4y ago
    That's great advice, so long as you don't have to pay property tax.
  - Syonyk 4y ago
    > It doesn’t make sense to not buy the best house you can afford. I heard that a lot in the 2006-2007 era. And plenty of people lost that "best home they could afford" back then. Fortunately, I couldn't afford a four-figure car, much less a house - though some other grad students seemed able to convince someone to offer them loans. No idea how all those worked out, I do hope some of them were able to keep the houses. I know quite a few people who are able to afford their houses, but wish they'd purchased smaller. A larger house, all other things being equal, will cost more to heat and cool, take more time to clean and maintain, and will generally have far higher carrying costs. You can mitigate some of them, but they're quite a bit more expensive than something smaller, simpler, and cheaper to maintain. I don't own a house as an investment. I own it as a place to live, with some land to do things outside. And at this point, our "minimum monthly spend" to keep the house climate controlled and lit is pretty darn low. Again, I recognize it's not a particularly popular point of view, especially in the tech circles, but I find "buying a big house as an investment when you don't need it" to be entirely absurd.
    - 4y ago
senectus1 4y ago
In Australia I don't think I've ever seen an ability to fix 100% of a mortgage. We tend to fix about 75% and variable the remaining.
- hackerfromthefu 4y ago
  That is wrong, you can fix 100%. However in Australia the fixed terms are shorter, typically 1-5 years.
  - senectus1 4y ago
    really? for mortgages? I've seen that for personal loans (done that myself) just never heard of or seen fixed term mortgages
    - sumedh 4y ago
      > really? for mortgages? https://www.commbank.com.au/home-loans/interest-rates.html https://www.commbank.com.au/home-loans/interest-rates.html Check the fixed rate loans
csomar 4y ago
There is no fixed rate loan. It's all variable. There is a trader (might be the bank) that is buying variable rate and selling you a fixed rate. If he goes bankrupt, somebody will be holding the bag. You might want to re-read your terms if the interest rates get much higher.
- bearjaws 4y ago
  Proof?
  - csomar 4y ago
    Banks get their liquidity from the Fed. Afaik, this liquidity is sold with variable interest rate (but I might be wrong or there might be some government program for that).
- fshbbdssbbgdd 4y ago
  I read my mortgage and there’s nothing in there that entitles the lender to raise the rate in any circumstances. The interest-rate risk is on whoever owns the bonds to that ultimately funded the mortgage. The value of those bonds is going down as interest rates rise.
- jjav 4y ago
  > There is no fixed rate loan. Most loans in the US are fixed rate for the life of the loan.
- deleted 4y ago
  [deleted]

by mrep 4y ago

Syonyk 4y ago

I'm in the US. I certainly could do something like that. I just won't. I hope it works for you. That's a level of debt-based risk that neither myself nor my wife have any interest in. There have been a lot of people throughout history who thought similar arrangements were "sure things," and they were, up until they weren't and it all came down around their ankles. We live in a very modest (manufactured, gasp!) home for our income, our "new" car is a decade old, with other vehicles ranging far older (the tractor is about 80), but still maintained in perfectly good condition and they all do exactly what we ask of them. Mostly. One of the Urals got demanding lately. It's low stress and high slack/flexibility. Those seem useful to us.

mrep 4y ago
2/3 of my debt payments are a sure thing as they are fixed and inflation is also a sure thing as deflation is catastrophic so governments won't allow it and deflation is trivially easy to fix with helicopter money. The only thing that isn't a sure thing are wages but they have over the long term gone up [0] and when they do go down it is usually only for a few years. The last one is a risk but I think it is well worth the risk. [0]: https://fred.stlouisfed.org/series/MEPAINUSA672N https://fred.stlouisfed.org/series/MEPAINUSA672N
- deleted 4y ago
  [deleted]
- junofan 4y ago
  I mean the bank took on the risk instead of you, and the bank owns your house. So… sure thing?
maxerickson 4y ago
Concern over US natural gas supply is not warranted. At all. If producers decided not to produce during a period of high prices (unlikely), we have gas in storage, right now, to last through the typical winter. https://ir.eia.gov/ngs/ngs.html https://ir.eia.gov/ngs/ngs.html (unfortunately, export capacity is a rounding error, so we can't do a whole lot to help Europe out. https://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm https://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm )
- Syonyk 4y ago
  > Concern over US natural gas supply is not warranted. At all. How'd that work for Texas a couple winters ago? Or a decade ago? Supply is more than just what's in the ground - it's the entire infrastructure related to delivering it to the various loads, and we've demonstrated at various points that it's not in as good of shape as people like to assume. Also, someone is literally blowing up pipelines over in Europe. Don't think US infrastructure is better guarded. If you don't think it's an issue, great. Hopefully you're right. If you're wrong, hopefully the outages are short lived. Because otherwise people die.
  - Spooky23 4y ago
    Texas is a broken theocracy. Cold places have pretty robust gas infrastructure, but cannot grow it because of the green people with gas heat who want all new installs to be heat pumps.
    - deleted 4y ago
      [deleted]
  - ajross 4y ago
    Texas didn't suffer a gas shortage? There was a weather-caused generation capacity crisis, which is a rather different resource. Is that what you're thinking about?
Spooky23 4y ago
You do you. But assets like real property are historically good investments. It doesn’t make sense to not buy the best house you can afford. I’m with you with cars… but even then the maintenance expense starts to catch up.
- csomar 4y ago
  > But assets like real property are historically good investments. This is wrong and might be misleading for some people. Real-estate where you live is certainly a good investment (if you are planning to live there). However, real-estate is a risky investment. I have passed through lots of abandoned commercial and residential buildings now that I'm pretty sure I'm never going to invest in real-estate.
- sidewndr46 4y ago
  That's great advice, so long as you don't have to pay property tax.
- Syonyk 4y ago
  > It doesn’t make sense to not buy the best house you can afford. I heard that a lot in the 2006-2007 era. And plenty of people lost that "best home they could afford" back then. Fortunately, I couldn't afford a four-figure car, much less a house - though some other grad students seemed able to convince someone to offer them loans. No idea how all those worked out, I do hope some of them were able to keep the houses. I know quite a few people who are able to afford their houses, but wish they'd purchased smaller. A larger house, all other things being equal, will cost more to heat and cool, take more time to clean and maintain, and will generally have far higher carrying costs. You can mitigate some of them, but they're quite a bit more expensive than something smaller, simpler, and cheaper to maintain. I don't own a house as an investment. I own it as a place to live, with some land to do things outside. And at this point, our "minimum monthly spend" to keep the house climate controlled and lit is pretty darn low. Again, I recognize it's not a particularly popular point of view, especially in the tech circles, but I find "buying a big house as an investment when you don't need it" to be entirely absurd.
  - 4y ago

senectus1 4y ago

In Australia I don't think I've ever seen an ability to fix 100% of a mortgage. We tend to fix about 75% and variable the remaining.

hackerfromthefu 4y ago
That is wrong, you can fix 100%. However in Australia the fixed terms are shorter, typically 1-5 years.
- senectus1 4y ago
  really? for mortgages? I've seen that for personal loans (done that myself) just never heard of or seen fixed term mortgages
  - sumedh 4y ago
    > really? for mortgages? https://www.commbank.com.au/home-loans/interest-rates.html https://www.commbank.com.au/home-loans/interest-rates.html Check the fixed rate loans

csomar 4y ago

There is no fixed rate loan. It's all variable. There is a trader (might be the bank) that is buying variable rate and selling you a fixed rate. If he goes bankrupt, somebody will be holding the bag. You might want to re-read your terms if the interest rates get much higher.

bearjaws 4y ago
Proof?
- csomar 4y ago
  Banks get their liquidity from the Fed. Afaik, this liquidity is sold with variable interest rate (but I might be wrong or there might be some government program for that).
fshbbdssbbgdd 4y ago
I read my mortgage and there’s nothing in there that entitles the lender to raise the rate in any circumstances. The interest-rate risk is on whoever owns the bonds to that ultimately funded the mortgage. The value of those bonds is going down as interest rates rise.
jjav 4y ago
> There is no fixed rate loan. Most loans in the US are fixed rate for the life of the loan.
deleted 4y ago
[deleted]