XBTJames on Nostr: The US is one of the only places you can even get a 30Y fixed rate mortgage. Canada, ...
The US is one of the only places you can even get a 30Y fixed rate mortgage. Canada, UK, most European Union countries, the tenors are much shorter (even if the amort schedule is the same).
That being said, I don’t think they’re going to “go away” per say. The 30Y mortgage is not difficult for banks to create and hedge. Without YCC and financial repression, the natural rate for UST yields and mortgages will continue to push into the double-digits. Still, my base case is YCC and financial repression “allowing” the middle class to continue to lever up housing. It’s politically easier than the alternative.
Consider Japan and the structure of their mortgage market. Decades of ZIRP have pushed the majority of loans to floating rates. Now the BoJ can’t raise rates without rekting the middle class, who have gorked 30+Y floating rate mortgages.
America is in a better position, but only marginally. Household balance sheets are holding in, but nobody can move because they’d have to refi their sweet sweet 30Y fixed they locked in in 2021 at 2.99%.
That being said, I don’t think they’re going to “go away” per say. The 30Y mortgage is not difficult for banks to create and hedge. Without YCC and financial repression, the natural rate for UST yields and mortgages will continue to push into the double-digits. Still, my base case is YCC and financial repression “allowing” the middle class to continue to lever up housing. It’s politically easier than the alternative.
Consider Japan and the structure of their mortgage market. Decades of ZIRP have pushed the majority of loans to floating rates. Now the BoJ can’t raise rates without rekting the middle class, who have gorked 30+Y floating rate mortgages.
America is in a better position, but only marginally. Household balance sheets are holding in, but nobody can move because they’d have to refi their sweet sweet 30Y fixed they locked in in 2021 at 2.99%.
quoting note195f…usgg30 year fixed rate mortgages are a massive US Gov welfare program but most americans assume they will always exist - hard to imagine them still being offered if inflation keeps running as expected