99% of borrowers have a mortgage rate lower than 6% | Hacker News Reader

99% of borrowers have a mortgage rate lower than 6%

fortune.com

8 pointswhack12 comments

This will be solved via combination of homeowner credit tightening and unemployment. Oh, and they are flooding the cities with unwashed immigrants and fentanyl which will make many nice areas undesirable, so the population will leave.

How long are rates fixed in the US?

In Aus & NZ, even “fixed” rates are only for a few years (3-5 I think).

Fixed rates are for the duration of the loan.

And is that typically 10 years? Or 25/30?

Most common mortgages in the US are 30 year fixed followed by 15 year fixed.

Someone should start a company that will let you transfer your mortgage to a new property for a flat fee. People would be lining up down the block to hand over their money.

Sounds like picking up pennies in front of a steam roller.

Where does the risk / exposure to interest rates come from in this example? Intuitively the loan already exists, this would just be a bridge.

If mortgage rates fall, people will refinance or take new loans when they move. If mortgage rates rise, these loans will be held to term and every new property that this is moved to, the lender will be originating a mortgage at 3% when the market is at 6%, 9%, or whatever.

A house with a mortgage is encumbered by a lien, which must be removed before the title can be transferred. To remove the lien you must pay off the mortgage. To pay off the mortgage, someone else has to lend you money, and nobody is willing to lend money at 3% when the Fed funds rate is 4.5%.

The fee would be so large it wouldn’t be worth it, because it would cost the same as traditional refinancing at prevailing rates, there’s no way around refinancing in this scenario.

If that happened mortgage rates would go up because duration risk on MBS would go from 7-10 years to 30.

When I was growing up there were two neighbors who just swapped houses.

Another friend years ago did a 1031 Exchange.

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