Hacker News Reader

Comment by m12k | Hacker News Reader

There's a world of difference between a mortgage (where you own an asset of similar size as the debt) and credit card debt.

View on HN

The interesting thing about a mortgage is that it's a leveraged bet on increased housing prices. Having a heavily mortgaged population makes it very politically difficult to decrease housing prices, as small changes in housing price will lead to huge swings in net worth, even as the high prices cause a number of social ills including but not limited to population decrease.

Welcome to the UK! Where the government does everything it can to keep house prices afloat. See Help To Buy scheme for first-time buyers and Stamp Duty Holiday to keep the housing market going during the Covid pandemic.

Australia is even worse.

Yeah it seems kind of obvious. It's also worth pointing out that you can get a 30-year fixed rate loan at just above 1% in interest [1]. Money is cheap, so people are likely to borrow more.

[1] http://www.nasdaqomxnordic.com/bonds/denmark Select expiry 2053, no deferred amortization.

Yeah, this. Here in the Netherlands mortgage is for most people their only form of debt and many people have "NHG", an insurance that helps them when they can't pay for their house anymore.

You're forgetting the student dept almost all students have to get into nowadays. And although credit cards are not as common for household expenses, a lot of retailers offer loans to buy appliances and such. I'm curious as how much people actually use these kind of constructs.

Is student debt really in thing in mainland Europe? Certainly some people need to borrow money to cover costs of living, but tuition is very low (from free to a couple thousands a year) in most places I know about.

You said it, cost of living ain’t free. My experience from Sweden is that few people work alongside studies, and even fewer have expenses paid for by well-off parents. Maybe if you’re from the city where you study you stay living and eating at home, but otherwise it’s very common to take out a (fairly cheap) student loan from the Swedish Board of Student Finance to cover your expenses.

I was so surprised when I moved here how few places in the real world take credit cards, even online you just pay straight from your bank account using iDeal (which is the most stupidly simple online payment system and I freaking love it!). I've been in NL for 9 years and don't have a credit card (recently I did take out an account with Revolut so that I could get a MasterCard Debit for buying filament from Prusa as they don't accept PayPal but that's all I use it for, and I have to pre-transfer money from my local bank to Revolut for this purpose). Debt beyond mortgages doesn't seem to be a thing here.

> just pay straight from your bank account using iDeal (which is the most stupidly simple online payment system and I freaking love it!) The UPI system in India is also really simple.

Context may be important here. Mortgage vs credit card debt in the US are a bit different due to the type of assets they back--real estate appreciates, many day to day purchases on a card do not.

However, there are places where mortgage backed assets depreciate [1]. There may be other places this is true, though I don't know enough about markets in northern Europe to say if this is an issue there.

1. https://www.rethinktokyo.com/2018/06/06/depreciate-limited-l...

Which is a big difference when housing prices aren't inflated and don't correct on a national scale.

When housing prices are inflated and are at risk of correcting as a whole, it can be worse than credit card debt.

Reply on news.ycombinator.com