I don't know why you'd want to deal with the European or UK system. It means your housing payment can fluctuate, possibly dramatically, due to actions entirely

I don't know why you'd want to deal with the European or UK system. It means your housing payment can fluctuate, possibly dramatically, due to actions entirely outside your control. Mortgages in the US generally don't have a payoff penalty after a certain amount of time (and some don't have one at all) so in a falling interest rate scenario you can simply refinance. To answer your question: the ultimate buyers (or should I say ultimate lenders) are taking the interest rate upside risk in exchange for stability. Mortgages just don't lose much money. When defaults are high they lose out on future interest and may take principle haircuts but they don't evaporate. Even most of the garbage from the 2007 financial crisis eventually recovered as housing recovered - comparatively few of the actual mortgages were written off. If you want that kind of stability you can buy US Treasuries to earn 1% (or even less). Or you can get into mortgages and earn 2.5% for almost the same risk. Those rates would be higher today of course since the fed is raising rates. You might rightly say that LIBOR or whatever rates don't fluctuate that much... in which case the same argument applies to the risk lenders take on in the US market.