19 June, 2024

u/brolybackshots on mortgages

https://www.reddit.com/r/Economics/comments/1d2l2we/mortgages_stuck_around_7_force_rapid_rethink_of/l61tvow/

Every other contemporary to America forces mortgage renewal every 3-5 years at most (Canada, UK, Australia, etc) so they could absorb a period of 0% since within a few years all those home owners will have to renew at high rates anyways (which is happening right now)

Americans now have this almost unfixable scenario of far too many mortgages locked in for 30 years at 2-3%. That causes everything to now freeze, as people with existing mortgages can now never move due to the 7% rates they'd never qualify for, and new home buyers cant ever enter the market as existing ones wont ever sell with their low locked in rates.

It creates a sharp dichotomy of haves and have-nots, where those with these tiny mortgage rates and existing home owners will feel fine and dandy with lots of extra savings and discretionary income to keep inflationary spending and demand high, while the "have nots" are now getting shafted due to the inflationary effect of the "fine and dandy" group + their inability to enter the housing market causing their cost of living to explode.