Shapps calls for 30 year fixed mortgages...

Graham_Devon

michaels wrote: »

AlsoI beleive US mortgage 'fixes' are not lock in deals but rather the borrower can remortgage penalty free at any time so not like the fixes we have in the UK at all.

It also means the consumer part of the economy is less sensitive to the short end of the interest rate curve so interest rate policy is more for business lending.

Plus, I believe, though stand to be corrected, they can simply hand the keys back and walk away.

Pretty large difference.

michaels

I think that may vary state by state but definitely true in some states - in a way it makes sense, you take out a loan secured on an asset, if you fail to meet the loan payments you forfeit the asset, why should you also have to pay any shortfall in the asset value?

Graham_Devon wrote: »

Plus, I believe, though stand to be corrected, they can simply hand the keys back and walk away.

Pretty large difference.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Plus, I believe, though stand to be corrected, they can simply hand the keys back and walk away..

Only in 16 out of 50 states, from memory.

And you still haven't answered my question.;)

Graham_Devon

HAMISH_MCTAVISH wrote: »

Only in 16 out of 50 states, from memory.

And you still haven't answered my question.;)

I'll let the article answer your question for you as it seems you glossed over.

In reality, borrowers who took Darling's advice were crucified. The long-term deal came with a painful get-out clause – if the young homebuyer wanted to switch to a better deal they faced a 3% early repayment charge. Normally, these sorts of penalties last just a few years on a conventional mortgage, but on the 25-year deal the charge applied to anyone trying to quit within the first 10 years. In other words, anytime before 2017.

I'm not saying the fix for x years is neccesarily bad. Infact I'm not saying anything at all, I just posted an article. However, if you want my opinion, 30 year mortgages are just papering over a problem. I know you'd love to see those cracks papered over, but I simply don't agree that papering over resolves anything.

I do find your take on it somewhat hypocritical however. You slam the banks for mortgage rationing and not lending at lower value, but when a 30 year deal comes along, which you like for obvious reasons, out go your cries of rationing and profiteering, and in comes the questions as to why there is a problem with the product.

HAMISH_MCTAVISH

Graham_Devon wrote: »

. However, if you want my opinion, 30 year mortgages are just papering over a problem. I know you'd love to see those cracks papered over, but I simply don't agree that papering over resolves anything.

What problem? What cracks?

If you could get a 4.5% 25 year mortgage at 90% LTV tomorrow, that would completely eliminate any risk from rising rates and perhaps a million people currently locked out could buy safe in the knowledge that their mortgage would remain affordable.

Or do you just not want those people to buy?.

HAMISH_MCTAVISH

Graham_Devon wrote: »

I do find your take on it somewhat hypocritical however. You slam the banks for mortgage rationing and not lending at lower value, but when a 30 year deal comes along, which you like for obvious reasons, out go your cries of rationing and profiteering, and in comes the questions as to why there is a problem with the product.

What the?

Try explaining that little nugget of wisdom.

Graham_Devon

HAMISH_MCTAVISH wrote: »

What problem? What cracks?

If you could get a 4.5% 25 year mortgage at 90% LTV tomorrow, that would completely eliminate any risk from rising rates and perhaps a million people currently locked out could buy safe in the knowledge that their mortgage would remain affordable.

Or do you just not want those people to buy?.

Right, so after all your howls about profiteering, in this argument, you assume that a 30 year fix will come at 4.5%.

Righty-O. Another thread where you change tact in an instant.

Were done.

ILW

HAMISH_MCTAVISH wrote: »

What problem? What cracks?

If you could get a 4.5% 25 year mortgage at 90% LTV tomorrow, that would completely eliminate any risk from rising rates and perhaps a million people currently locked out could buy safe in the knowledge that their mortgage would remain affordable.

Or do you just not want those people to buy?.

Could see a lot of banks going under if their funding costs increase.