If I'm not mistaken US mortgage rates are several percentage points above what they would be if prepaiment was not "free". You have to pay for that option some way or another.
You can find them but they’re rare, because it messes up the resale of the loan.
Our 80/20 loan back in the countrywide heyday had a prepayment penalty on the 20 which also had a balloon. We structured our refinance to avoid the penalty.
If so, I wonder why the option is not offered when shopping for a mortgage. I have a 2.5% 30 year fixed, so it is hard to imagine a 0.5% loan, with an early repayment penalty since I would have no incentive to pay it off early anyway.
Negative interest rates were hard to imagine a few years ago but they have been a reality in many parts of the world for several years. Maybe it's not multiple percentage points and it's around one, I don't know the specifics of the calculations. But the prepayment risk in principle has to be compensated. Otherwise lenders would have no incentive to lend money to you - if you can pay it off early anyway.
"The prevalence and handling of prepayment risk differs in two respects between Europe and the US. First, while in the US prepayment costs may be priced into the interest rate, in many European countries lump-sum prepayment penalties are induced by statutory requirements. Often banks impose charges on homeowners for early repayment. These fees force households to bear part of the prepayment risk and, if the fees are sufficiently high, may deter homeowners from prepayment, thereby nullifying the prepayment risk faced by banks. An exception to this is the Danish mortgage market, where long-term fixed-rate mortgage loans with an embedded option of a penalty-free prepayment are typically offered, as in the US."
Our 80/20 loan back in the countrywide heyday had a prepayment penalty on the 20 which also had a balloon. We structured our refinance to avoid the penalty.