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A lot has changed since 2018, especially related to remote work, which negates several of the points of this article related to local labor markets and lack of

by breput 3y ago

A lot has changed since 2018, especially related to remote work, which negates several of the points of this article related to local labor markets and lack of mobility at least for some white collar jobs. If you only read Hacker News you might think WfH is dead, and it might be for FAANG-ish companies, but in my industry it is still as remote-centric as it has been since 2020. I see people hired every day and we don't even have a sales office in that entire state. So yeah, having a locked-in 2.75% 30 year mortgage is going to encourage you to stay put, but that's probably a net positive thing for society because you are going to be more invested in the the success of the school system, and the local library, and getting to know your neighbors. And if you're on the wrong side of the interest rates right now or need to move, maybe you have to rent for awhile or buy a more affordable house than you expected. That's nothing new and eventually things will revert and you'll be the next low interest 30 year mortgage homeowner. The banks will continue to win.

lrem 3y ago
Wait, do mortgages in the USA get cheaper with lower rates? In Europe it appears that they’re always the maximum the people will be willing to pay. The only effects of negative base rates was house prices launching into the stratosphere. The cheapest place on the market in my suburb is 1.75 million USD for a two bedrooms condo (80m^2 = 861ft^2) with one parking spot.
- breput 3y ago
  No[*], but the monthly payments get more affordable. The principal doesn't change but if you're paying 3% on a mortgage and possibly getting a tax deduction on that interest so it might effectively be more like 2.5%, then you can decide to pay that down more if you're earning more on other investments. [*] It's arguable that low interest rates cause housing prices to rise, since more people can afford monthly payments on more expensive houses.

by breput 3y ago

lrem 3y ago

Wait, do mortgages in the USA get cheaper with lower rates? In Europe it appears that they’re always the maximum the people will be willing to pay. The only effects of negative base rates was house prices launching into the stratosphere. The cheapest place on the market in my suburb is 1.75 million USD for a two bedrooms condo (80m^2 = 861ft^2) with one parking spot.

breput 3y ago
No[*], but the monthly payments get more affordable. The principal doesn't change but if you're paying 3% on a mortgage and possibly getting a tax deduction on that interest so it might effectively be more like 2.5%, then you can decide to pay that down more if you're earning more on other investments. [*] It's arguable that low interest rates cause housing prices to rise, since more people can afford monthly payments on more expensive houses.