Comment by mellosouls
1 day ago
I (like I'm sure many others) predicted it in 2007 and hedged against it by getting a 10 year fixed mortgage at then-current rates on the basis that rates would go sky high as they had in earlier recessions in the UK.
They plummeted to next-to-zero, and in addition to the injury I had to endure the insult of the people who hadn't seen it coming gloating about their low standard variable rates.
Ofc I clearly didn't have much real economic understanding but I guess I am saying that beyond normal common financial sense (the lack of which at scale leads to these situations) which you should be using anyway, we don't really know which way the wind is blowing, and what the exact consequences will be.
Why you could not refinance when the rates went to 0%? In the US a lot of people did that in 2009/2010 and then again during COVID
Refinancing and loans work differently outside of the U.S. what I don't remember is exactly how. If I recall, you can't refinance without paying
Well, you can go to another bank so that they can cover your mortgage and open a new one with new rates/conditions.
That you can do anywhere as long as you have a collateral/guarantor.
Prepayment penalties are illegal for the vast majority of loans that consumers can get in the US, which makes it a no-brainer to refinance any time the payment saving exceeds the cost of writing a new loan.
The Trump admin has floated the idea of allowing prepayment penalties in home mortgages, BTW.
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I remember the opposite, just before we left the ERM (European Exchange Rate Mechanism). Interest rates hit 15% and one of my colleagues was gloating about how he had just taken on a fixed rate mortgage. A few days later we left and interest rates plummeted.