3 ms·

Why is that insane? It’s good for the consumer, no?

appreciatorBus 1y ago
Not all consumers are homeowners. Something that is only good for one portion of the public is usually paid for by the other portion.
jstanley 1y ago
It's insane because why would you offer such a product? You're giving the customer a free bet on interest rates.
- verall 1y ago
  Because the government is interested in subsidizing residential property ownership. Why would healthcare be free? Who would offer such a product? Because some governments are interested in subsidizing such things.
  - jstanley 1y ago
    > the government is interested in subsidizing residential property ownership. As an aside: that doesn't work, it just makes houses more expensive.
    - pqtyw 1y ago
      Plenty of places don't have 30 year mortgages, variable rates might even be standard there and real-estate is still unaffordable. Until Covid housing was actually quite cheap in the US relative to income compared to many other Western countries. It still relatively is, just compare major US and Canadian cities, the gap is huge.
- techblueberry 1y ago
  Free bet? You have to pay to refinance.
  - jstanley 1y ago
    Thanks, I didn't know that.
  - orochimaaru 1y ago
    Not a whole lot. Also, if you have a generous enough mortgage agent they will assume the cost of the refi. I’ve done at least 2 refi’s in the past at $0.
- daft_pink 1y ago
  At the end of the day, they make money on the interest. Supply meets demand.
- pmfgpmfg 1y ago
  [dead]
- uqual 1y ago
  A lender never (intentionally) gives anyone anything for "free". This is why ARMs often have lower interest rates than fixed 30 year mortgages - the risk to the lender from rising interest rates is lower with ARMs so lenders generally accept a lower interest rate on ARMs. Both sides are making a bet on future interest rates and alternative investment returns - with one (the borrower) paying extra for an "opt out early" option for which the lender assumes the risk. It's a bit like the borrower is buying a long term put or call option from the lender which the borrower is free to exercise at any time or to let expire but the lender can't get out of (they, of course, can always sell the mortgage - but perhaps at a loss in some economic climates due to past and expected future interest rate declines and/or changes in default risk due, for example, to a recession or depression).

Not all consumers are homeowners. Something that is only good for one portion of the public is usually paid for by the other portion.

jstanley 1y ago

It's insane because why would you offer such a product? You're giving the customer a free bet on interest rates.

verall 1y ago
Because the government is interested in subsidizing residential property ownership. Why would healthcare be free? Who would offer such a product? Because some governments are interested in subsidizing such things.
- jstanley 1y ago
  > the government is interested in subsidizing residential property ownership. As an aside: that doesn't work, it just makes houses more expensive.
  - pqtyw 1y ago
    Plenty of places don't have 30 year mortgages, variable rates might even be standard there and real-estate is still unaffordable. Until Covid housing was actually quite cheap in the US relative to income compared to many other Western countries. It still relatively is, just compare major US and Canadian cities, the gap is huge.
techblueberry 1y ago
Free bet? You have to pay to refinance.
- jstanley 1y ago
  Thanks, I didn't know that.
- orochimaaru 1y ago
  Not a whole lot. Also, if you have a generous enough mortgage agent they will assume the cost of the refi. I’ve done at least 2 refi’s in the past at $0.
daft_pink 1y ago
At the end of the day, they make money on the interest. Supply meets demand.
pmfgpmfg 1y ago
[dead]
uqual 1y ago
A lender never (intentionally) gives anyone anything for "free". This is why ARMs often have lower interest rates than fixed 30 year mortgages - the risk to the lender from rising interest rates is lower with ARMs so lenders generally accept a lower interest rate on ARMs. Both sides are making a bet on future interest rates and alternative investment returns - with one (the borrower) paying extra for an "opt out early" option for which the lender assumes the risk. It's a bit like the borrower is buying a long term put or call option from the lender which the borrower is free to exercise at any time or to let expire but the lender can't get out of (they, of course, can always sell the mortgage - but perhaps at a loss in some economic climates due to past and expected future interest rate declines and/or changes in default risk due, for example, to a recession or depression).