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Comment by Danski0 | Hacker News Reader

Reading comments here it seems that US house owners consider 3.5% low, is this correct? Article is locked for EU readers.

This just makes me even more scared about Swedens new normal that is 1.50% (1.00% after tax deduction). Today I even get offered 0.99% (0.70% after tax deduct).

What is currently "normal" rates in different regions in the world?

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3.5% in the US is probably adjustable rate. 30-year fixed rate is around 4.66% (http://www.freddiemac.com/pmms/). Note that, AFAIK, the US is the only country in the world to offer fixed 30-year mortgage rates.

Here in Australia five year fixed rates are around 4.79%.

Swedish rates are crazy low. Lots of people are going to go bankrupt when they're forced to renew at higher rates.

US is definitely not the only 30y fixed country in the world... how many countries are you familiar with? For example, the Netherlands has done 30y since forever. Current rates are between 2.5% (best case) and 3% (worst case with 0 down) for 30y fixed. 5y fixed is 1.2% to 1.6%, it's absolutely ridiculous.

3.5% is low in the US, but it also depends on the duration and type of the loan.

Rates below 2% would be exceptionally rare, but you can't compare rates if you don't also consider the other terms of the loan.. Are your <1% loans for the full price of the home, or a reduced price after accounting for you paying for some percentage in cash? (in the US, known as a down payment)

Loans are always approved up to 85% of home value, so 15% cash payment required. 1 - 1.5% loans are freely available with 1-5 years fixed rate. And you get 30% back of the interest paid from IRS yearly.

Repayment terms are usually 40-100 years and not uncommon that 3years in on a 100year repayment you refinance the 97% left on a new 100years repayment plan.

To put it into some numbers. A typical middle class income for a couple would be 85.000usd/year, 60.000usd after taxes. They buy a home for 320.000usd with a loan of 270.000usd. Interest cost $180/month.

I find it very interesting that the markets in many countries have similar movements but loans are nothing alike. Are country markets really so different or are some markets just broken and it will catch up one day?

American mortgages are a little unusual in that they are typically fixed rate for 30 years and can be paid off at any point without penalty (so if rates drop you can refinance for the lower rate).

Similarly in Mexico: You can choose to pay for 20/30 years a fixed amount. And if you pre-pay you either reduce the number of months or reduce the amount to be paid each month. Now, rates are not similar at all, being tripled in Mexico.

Shit, in November last year I got a mortage for 8.5% in Mexico. That is considered low over here, which is crazy. In 2018, mortage rates have gone up to 13%.

I envy USA rates of 4%. Rates like the one you describe in Sweden (1.5%) would be a dream.

Think about it the other way around, that you would lend someone a significant amount of money, that you could also invest in stock, into your own business etc. I think 1.5% is really low, when you think about it that way.

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