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Comment by mijamo | Hacker News Reader

And what about Sweden where people mostly have 3 months rate mortgages and are even more leveraged than Canada? Here sometimes people don't even pay back the principal at all, it's just interests payment every month and waiting for the increase in price to erase your debt.

That felt super weird for me coming from France where flexible mortgage rates do not exist.

But of course everybody was getting 1% last year, and now it's 1.5% and everybody already feels the difference. If it had to go up to 4% the whole country would be in crisis, and above that well...

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Same in Norway. Here, banks are required to deny mortgages to people who they do not see as being able to handle much higher rates than on the date the mortgage was taken. Is that not the case in Sweden?

(I personally think they should test for even higher rates – I'm terrified to see how many people are in absolute shock that rates are rising rapidly, after being told that exactly that will happen for years)

I think you overestimate the sophistication of the models the banks use. There's no reason for them to use honest models. If things turn to shit, the public will bail them out anyway.

So the banks may well say "if you spend a minimum on food and clothing, and nothing on anything else, you can afford to pay high rates." But that's not what regular people would mean by affording it.

Fair enough, but that doea still mean that higher rates are factored in. Not just as well/strongly as you and I would like.

It's the same case in Sweden, all new lenders have to be able to handle rates of 6-8%.

Dont they have fixed rate mortgages in sweden? Renegotiating the rate every 3 months seems crazy.

In denmark fixed rate mortgages are still the most common. I have a 30 years fixed rate (at 1%) mortgage, that I can pay out at any time (at end of any given quarter).

Flex rate mortgages are somewhat popular in good times, but they are renegotiated every year or every five years. There was a period where the one year rate loans had negative interest rates.

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