Calling it luck makes it sound like there are uncontrollable forces at work. However, these consequences are entirely downstream of artificial, man-made policies.
Insanely good if you have a home and a low rate (or refi into one)
Insanely bad if you don't have a home.
It's not a natural construct, it's an artificial loan that only exists because the fed is the counter party.
In an natural economy, mortgages would all be variable rate, or fixed rate but much higher than what is available today.
This would also mean that the housing rush of 2021 would have been crushed by rate increases in 2022/23. In fact there probably wouldn't have been much of a rush at all.
> In an natural economy, mortgages would all be variable rate, or fixed rate but much higher than what is available today.
> This would also mean that the housing rush of 2021 would have been crushed by rate increases in 2022/23. In fact there probably wouldn't have been much of a rush at all.
Interestingly, you described almost exactly how mortgages work in Canada: you pay more for a fixed rate, and even then, you can only get a fixed rate for a term of up to 10 years. And the average term is more like 5 years. People's mortgages have been going up now that interest rates are up. This was not impossible to predict.
And that certainly didn't stop the housing rush of the last 15 years.
According to a realtor association site [0] the 'Residential - All Types' price for 'Greater Vancouver' went from $466,500 in March 2009 to $1,196,800 in March 2024. That is a 2.57x multiple.
Fixed rate is reasonable product. But there should be cost involved in paying it back in higher interest rate environment. So if you payback early you would need to pay the delta between current fixed rate and one you have.
It's a reasonable product when it is priced correctly. It's not priced correctly when the one taking on the risk is also the one who can pull money out of thin air.
> it buys them from the banks and the banks know this going into the loans
This isn't how the mortgage market works. Qualifying mortgages are guaranteed by Fannie and Freddie. The Fed's participation in the mortgage market has been for liquidity, not credit, purposes.
Kill Fannie & Freddie and the 30-year mortgage goes away. Ban the Fed from buying mortgage securities and rates go up a bit.
> Kill Fannie & Freddie and the 30-year mortgage goes away.
Probably not; without them, the norm wouldn't have been created, but while rates for them may change those going away won't remove the expectation and, given the expectation, the market will find a rate af which it can fill it.
Mortgages in general will be less attractive, though.
> while rates for them may change those going away won't remove the expectation and, given the expectation, the market will find a rate af which it can fill it
Fixed-rate 30-year mortgages don’t exist, except for the very rich, in most of the world. The unsubsidised price of the instrument likely collides with popular conceptions of usury.
Where I live in NYC, a relatively modest 3BR apt. is currently 2.5-3.5 million. Having invested for 15 years to eventually own a place, the recent combo of interest rates and home price increases feels like the ultimate rug pull. It seems inevitable that this will lead to a decline in birth rates and a host of other second order effects.
Buddhists at least believe this to be controllable.
It's the ultimate victim blaming religion - you're poor because you were a bad person in a previous life.
Very awkward to jokingly say "I wish I were a puppy" when I play with my dog and to see the look of abject horror on my Buddhist partners face. I'm told even wishing for something like that significantly increases my chances of becoming a dog in the next life - which is permanently an undesirable fate.
Huh, have you asked them if saying "I wish I was an enlightened super-being" carries similar fate-affixing virtues? Because if so it seems like a neat short circuit
Actuallu, Buddhists form that though very often as a part of their practice. The basic idea is that an action follows intention, so making this intention explicit helps.
yes, it does. It's essentially like reinforcement, where you keep telling yourself what you want, and learn how to get that. Eventually you work to get that.
It all starts with your wish.
As a free person, I can choose my religion and blame God for a change. The difference is that if you place locus of control further to yourself, that gives you (and not an external entity) enormous power. Yes, you might not be able to change what happened, but you can influence what is going to happen, even if it's not immediately obvious and if some links of the casual chain are hidden.
> It's the ultimate victim blaming religion - you're poor because you were a bad person in a previous life.
A slight misunderstanding, or an inconsiderate person may use it for victim blaming, but that's not what lays down. It gives guidelines that our actions have consequences, good or bad even if they are not immediately visible to us. On HN, people talk about the role luck plays in the success of startups. Two different people working hard, with brilliant ideas: one of them gets to build a billion $ company, while the other may go bankrupt. What we call luck, or randomness here is explained as karma (good, or bad deeds accumulated from earlier lives). Used with right understanding, and compassion, this provides good guidance for those who seek it.
Insanely good if you have a home and a low rate (or refi into one)
Insanely bad if you don't have a home.
It's not a natural construct, it's an artificial loan that only exists because the fed is the counter party.
In an natural economy, mortgages would all be variable rate, or fixed rate but much higher than what is available today.
This would also mean that the housing rush of 2021 would have been crushed by rate increases in 2022/23. In fact there probably wouldn't have been much of a rush at all.