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I mean, manufacturing 30-year fixed rate fully pre-payable non-recourse mortgages does not happen in a free market. It takes a lot of government subsidies to ma

I mean, manufacturing 30-year fixed rate fully pre-payable non-recourse mortgages does not happen in a free market. It takes a lot of government subsidies to make that happen—in particular the government assumes the credit risk on something like 85% of US mortgages. The United States government is very into the idea of spending its resources to subsidize homeownership. Canada has made different policy decisions, like single-payer healthcare. If the societal choice was between universal healthcare and extremely borrower-friendly mortgages (and I don’t think that it really works that way, at least not in such stark terms) I’m not sure I’d pick the mortgages.

bluGill 2y ago
It can happen. There is risk, but the reward is very high and so it is worth it. However the government often will not allow you to get the full reward and so while the numbers work out for everhone in a free market it doesn't happen. adjustable rate mortgages in the us are lower interest rate. Often in the us they are a better deal - we are just looking at one case where everyone in a fixed rate two years ago is better off than those with adjustable rates.
voisin 2y ago
> It takes a lot of government subsidies to make that happen No doubt, but the upside is a populace not especially at risk to interest rates which is absolutely crushing and systemically risky currently. > in particular the government assumes the credit risk on something like 85% of US mortgages. In Canada, CMHC does something similar so I am not sure we get away with anything special that the Americans are not.