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Comment by jhulla | Hacker News Reader

These days, a significant portion of the mortgage industry is built on rapidly transferring risk onto the Federal Government. Even though agency bonds are sold on the open market, after 2008, we all know those are effectively insured by the Federal Government.

This is a way to pass free money to everyday homebuyers.

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The money arguably ends up in the hands of the sellers. The buyer maybe gets a little more buying power (but the people they are competing with are getting that too).

Not really, at least in competitive markets like the Bay Area. The buyer has an increasing need to anti up more of a downpayment because of inflating home prices. So while the financing is easier and they can leverage themselves more, they still need to come up with a quickly growing chunk of change to even take advantage of the cheap debt.

Are you agreeing with my parenthetical?

I was just clarifying that while the buyer in theory has more total buying power (so yes, I agree there), it is all on the debt side. Their buying power from a cash standpoint has, if anything, worsened, because of housing cost inflation and the extra downpayment they need to have saved up.

In this market with cheap debt, there's a large number of HENRY's (High Earner, Not Rich Yet) who can afford the mortgage payments, but are perhaps too young to have had a chance to have saved up the necessary downpayment without help from families and such.

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