[brabel]

You guys have 30 year fixed rate mortgages???? How the hell can that work? How can banks predict with any accuracy the interest rates for that kind of period?

I had a 3-year fixed rate mortgage some 5 years ago, fixed at the rate of the time which was historically extremely low (below 2% pa), before the interest rates skyrocketed, and was really happy :D I had a couple of years on those rates... but then I went to re-negotiate and it was best to get just floating rates as the banks were all panicking and would only freeze rates for 3 years at outrageous levels... I think I got floating rates at around 3.5% or 4.0% (it has gone down since). I imagine it would be extremely dangerous for a bank to just have frozen my rates for 30 years anywhere near that historical low, so you would have to pay a huge margin for them to take that risk , no?

[selectodude]

The federal government buys a significant percentage of these loans and eats the interest rate risk. It’s a direct subsidy.

[marcinzm]

At the bottom of the rate curve a few years ago a 30 year fixed rate was 2.8%, a 5/1 adjustable rate was 2.5%, and a 15 year fixed was 2.1%.