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by mindvirus 764 days ago
This is a fascinating article, though I'm not sure I grok the analogy about flow meters.

Given they're so securitized, I wish I could buy back my own mortgage at a discount given how much interest rates have risen. It feels that given the notes about conforming mortgages being fungible, that product/service should exist.
2 comments
jjav 764 days ago
> I wish I could buy back my own mortgage at a discount given how much interest rates have risen

You can! Even if not directly. Take the lump sum cash you'd have to use to buy off your mortgage today. Put it into an interest-bearing instrument of your choice that is paying these higher rates today (higher than your mortgage). Us that to pay the monthly mortgage and the different is profit.

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taffer 764 days ago
> I wish I could buy back my own mortgage at a discount given how much interest rates have risen

But why would you want to do that? If you take out a fixed-rate loan and interest rates rise, you are already making a profit. Financially, there would be no further benefit from the buy-back of the loan.

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mindvirus 764 days ago
Presumably I'd be able to buy it back at $0.60 on the dollar since that's what the market value of a low interest mortgage would be on today's market of 7% mortgage rates.

I'd want to do it so I could sell my place and move. No doubt if I sell my place now, the bank is just taking that money and lending it out again, making a profit on the difference in rates.

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patrickthebold 764 days ago
Yes, but that boils down to changing the terms of your loan in your favor.

You probably should ask yourself: How much of a premium on your mortgage would you have paid to have the option to pay it off at market rates if rates happen to go up.

A similar example: in the US, typically loans have no prepayment penalty, but in practice you are paying for that option. I'm theory you could get a lower rate if you agreed to a high fee if you prepay.

I think it ends up not being worth it for lenders to give you so many options when picking your loan terms, simply because lots of people won't understand the subtitles/there's not much demand for those products.

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