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They're unhappy because after the last 10 years of low interest rates like 90% of people completely forgot how interest rate products , whether that is mortgage

They're unhappy because after the last 10 years of low interest rates like 90% of people completely forgot how interest rate products , whether that is mortgages or savings accounts, work. Your average person has no idea how he can get these 5% rates by simply taking a day off work to just move his money into a money market fund. On a more local topic: I know 4 people in my personal friend group that have had their financial situation basically get ruined because they did not bother switching from SARON(Swiss variable mortgage rate) when rates were stupidly low and have had their monthly payments like double. Literally none of them understood how screwed they would be if interest rates moved even 1% because the bank never actually bothers telling you that.

prirun 3y ago
Re: the adjustable rate mortgages, my neighbor also didn't refinance her (US) ARM to fixed-rate. I talked to her about it when rates were really low, we got quotes for 2.9%, but she didn't want to pay the $3K finance charge (that would have been bundled into the loan). The rate went up once last year, then this year they were going to raise it again and she had an interest-only provision for 10 years that expired this year, so she was going to have to start making principle payments too. Her plan is to make interest-only payments until she dies, then sell the house and pay off the mortgage. On the 2nd rate increase, we talked to the mortgage company on the phone and they said they couldn't do anything about the principle payments other than refinance the loan, and they no longer offer interest-only loans. So I wrote them a letter, included her most recent tax assessment and property valuation, and told them that if she couldn't keep making interest-only payments, she was going to pay off the loan. So far that has worked: they didn't do the 2nd rate increase or start principle repayment. So if you still have an ARM and are getting strong-armed by the mortgage company, you might try threatening to pay off the loan, in writing. A mortgage company would rather get continuing, smaller interest payments vs no future interest.

prirun 3y ago

Re: the adjustable rate mortgages, my neighbor also didn't refinance her (US) ARM to fixed-rate. I talked to her about it when rates were really low, we got quotes for 2.9%, but she didn't want to pay the $3K finance charge (that would have been bundled into the loan). The rate went up once last year, then this year they were going to raise it again and she had an interest-only provision for 10 years that expired this year, so she was going to have to start making principle payments too. Her plan is to make interest-only payments until she dies, then sell the house and pay off the mortgage. On the 2nd rate increase, we talked to the mortgage company on the phone and they said they couldn't do anything about the principle payments other than refinance the loan, and they no longer offer interest-only loans. So I wrote them a letter, included her most recent tax assessment and property valuation, and told them that if she couldn't keep making interest-only payments, she was going to pay off the loan. So far that has worked: they didn't do the 2nd rate increase or start principle repayment. So if you still have an ARM and are getting strong-armed by the mortgage company, you might try threatening to pay off the loan, in writing. A mortgage company would rather get continuing, smaller interest payments vs no future interest.