The New York Times has decided, as have most leftists, that things that are good for you are bad. Among those things is the 30-year fixed mortgage, which enables a lot of people to get mortgages who wouldn’t have been able to afford it, but the New York Times says it fosters inequality and is unfair, so everyone in the middle class must be unable to afford a mortgage. [I added that last comment myself.]
THE TIMES:
That mortgage has been so common for so long that it can be easy to forget how strange it is. Because the interest rate is fixed, homeowners get to freeze their monthly loan payments for as much as three decades, even if inflation picks up or interest rates rise. But because most U.S. mortgages can be paid off early with no penalty, homeowners can simply refinance if rates go down. Buyers get all of the benefits of a fixed rate with none of the risks.
“It’s a one-sided bet,” said John Y. Campbell, a Harvard economist who has argued that the 30-year mortgage contributes to inequality.“If inflation goes way up, the lenders lose, and the borrowers win. Whereas if inflation goes down, the borrower just refinances.”
As the Times explains, [It’s bad because] “the 30-year mortgage contributes to inequality.” They think it’s “strange” or want you to think it’s “strange” and unfair. Apparently, they don’t think banks bleed us dry quite enough. They don’t like homebuyers having an advantage over lenders as inflation hits.
The Times argues that homeowners with great rates won’t sell and open the market to new buyers because rates are so high.
DAMN RIGHT!
The more intelligent Wall Street Journal explains that older buyers do sell to downsize.
They’re wrong. The United States housing market has provided unparalleled equity access for many Americans. It’s a GOOD thing.
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The socialists now in charge want Americans to be socialists, have nothing, and feel guilty when they have something – if you’re white.
This is another New York Times distraction. Let’s see, what could they be distracting us from? Open borders and millions of anonymous, young single men coming into the country, serious economic problems, wars, and all the other disastrous things they are doing?
If inflation goes way up the lenders lose? I don’t think so because if they did, they wouldn’t offer a 30yr fixed rate mortgage.
John Y. Campbell is just another leftist who has never held a real job telling everyday people who have no power over the system that economic problems are our fault. No wonder Harvard’s reputation is headed for the toilet.
NYT is the paper of regime lies. Doublespeak. Hate.
The New York Times newspaper (is it still printed?) is nothing more than bird cage liner now. Too many lies to count.
The article assumes that the interest rate charged does not price for the option the buyer has and that there were no upfront fees to cover this. Essentially, it is saying that banks offer options to buyers without charging for them Ridiculous
on a 5% $250k loan for 30 years, the banks collect $233k. If the owner refis the banks still get essentially the same spread on the loan. Hardly a loss. The 30 year mortgage with some kind of guarantee probably makes the market for banks to make loans 100x larger…..they are likely not complaining. Don’t forget all the fees that they get when things get refinanced. What drivel.