Do you have an I-phone? You know why people can afford them? Because you can buy it on a zero interest 24 month payment plan. Walk into an Apple store and tell them you want to buy their phone, they will tell you for $X per month, you can have a brand new shiny phone and the payment is conveniently charged to your credit card account so you don't get bombarded with an extra bill.Sasquatch1 wrote: ↑Fri May 21, 2021 4:29 pmbrianH wrote: ↑Mon May 10, 2021 2:25 pmWhy don't 30y mortgages make sense? Houses last, even without much maintenance, at least that long. One could also reasonably expect that 30 years represents an average length of time someone might inhabit a home and still be working to pay the mortgage (age 30-60). The fact that people move more frequently than that is irrelevant.New Providence wrote: ↑Mon May 10, 2021 10:17 am 30 yr mortgages make no sense. Housing prices would collapse if the maximum tenor was, say, 5 yrs.
If anything, I expect the US will start to see 40 or 50 year mortgages soon, like other countries already have.
A shorter term would probably lower prices overall, but it would also price more people out. There's some minimum it costs to build a house, and that minimum is larger than almost anyone could afford paid over 5 years.
I agree with all points and have been expecting 40yr mortgages.
The real issue though is WHY these notes on everything are going with longer terms.
That issue is so people, govt and business can keep kicking the can down the road and charging inflated prices. I believe, big business has learned that they can charge almost anything they want as long as they give us an affordable monthly note. Look at vehicles, it’s easier to give us a longer finance then it is for them to come down to reality with prices. The sad part is, how financially dumb the general population is. They don’t even see the trap.
We are now starting to see notes on literal everything! All the way down to buying a shirt online, you get bombed with 4 easy payment options.
Idk how people can’t see what is taking place.
The FED is also contributing to this mess in the housing market by buying back $20 Billion of mortgage backed securities each month, that buying is driving down the yields in the mortgage finance market and helping the feeding frenzy which is more akin to a school of piranha's surrounding the house or condo or coop going up for sale. It's insane and worse than the 2008 bust. There is a big bubble in housing right now.