[sunshowers]

This is a creation of the US federal government — a 30 year fixed makes no sense without government intervention, since that is an absurd level of interest rate risk the bank would need to take. I don't know of any other country with 30 year fixed mortgages — most have something similar to the 5/1 ARM as the main option.

edit: Seems like Germany has fixed mortgages but makes it hard to refinance.

[Panzer04]

The fixed prepayment is what makes them insane. Fixed interest instruments are common, at least at the institutional level, but no penalty prepayment option is the crazy part, because it exposes the lender to all the downside if rates go up and none of the upside if they go down.

[sunshowers]

That makes sense. Refinancing is essentially that.

[MEMORYC_RRUPTED]

Belgium and The Netherlands have it too, though it's optional. Most mortgages have a 30 year runtime with a 10 year fixed rate. The longer your fixed rate, the higher the rate becomes.

For the Netherlands: While it differs per bank, legally you're allowed to pay up to 10% of your mortgage extra per year (some banks offer higher rates, I can do 20% for example) without extra costs. When the rate changes (due to going from fixed to variable, or variable with a large change in a year) you're allowed to pay back as much as you want, without extra costs.

If you want to pay back more/faster, the bank calculates a fee ("loss of income due to lost interest payments") that you have to pay, which is still cheaper than just doing your regular payments.

The above statement also applies if you want to refinance if, for example, your home went up in value. They can and will drop your rate but you have to pay a fine. That being said, in the past, when rate drops were really large, you could go to a different bank, have them take over your mortgage pay the fine for you just so they can get you to come to them (though I'm assuming they're no longer so keen on that).