90% of US mortgages are fixed for the entire loan.
I hope it works for you. That's a level of debt-based risk that neither myself nor my wife have any interest in. There have been a lot of people throughout history who thought similar arrangements were "sure things," and they were, up until they weren't and it all came down around their ankles.
We live in a very modest (manufactured, gasp!) home for our income, our "new" car is a decade old, with other vehicles ranging far older (the tractor is about 80), but still maintained in perfectly good condition and they all do exactly what we ask of them. Mostly. One of the Urals got demanding lately.
It's low stress and high slack/flexibility. Those seem useful to us.
The only thing that isn't a sure thing are wages but they have over the long term gone up [0] and when they do go down it is usually only for a few years.
The last one is a risk but I think it is well worth the risk.
If producers decided not to produce during a period of high prices (unlikely), we have gas in storage, right now, to last through the typical winter.
https://ir.eia.gov/ngs/ngs.html
(unfortunately, export capacity is a rounding error, so we can't do a whole lot to help Europe out. https://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm )
How'd that work for Texas a couple winters ago? Or a decade ago? Supply is more than just what's in the ground - it's the entire infrastructure related to delivering it to the various loads, and we've demonstrated at various points that it's not in as good of shape as people like to assume.
Also, someone is literally blowing up pipelines over in Europe. Don't think US infrastructure is better guarded.
If you don't think it's an issue, great. Hopefully you're right. If you're wrong, hopefully the outages are short lived. Because otherwise people die.
Cold places have pretty robust gas infrastructure, but cannot grow it because of the green people with gas heat who want all new installs to be heat pumps.
I’m with you with cars… but even then the maintenance expense starts to catch up.
This is wrong and might be misleading for some people. Real-estate where you live is certainly a good investment (if you are planning to live there). However, real-estate is a risky investment. I have passed through lots of abandoned commercial and residential buildings now that I'm pretty sure I'm never going to invest in real-estate.
I heard that a lot in the 2006-2007 era. And plenty of people lost that "best home they could afford" back then. Fortunately, I couldn't afford a four-figure car, much less a house - though some other grad students seemed able to convince someone to offer them loans. No idea how all those worked out, I do hope some of them were able to keep the houses.
I know quite a few people who are able to afford their houses, but wish they'd purchased smaller. A larger house, all other things being equal, will cost more to heat and cool, take more time to clean and maintain, and will generally have far higher carrying costs. You can mitigate some of them, but they're quite a bit more expensive than something smaller, simpler, and cheaper to maintain.
I don't own a house as an investment. I own it as a place to live, with some land to do things outside. And at this point, our "minimum monthly spend" to keep the house climate controlled and lit is pretty darn low. Again, I recognize it's not a particularly popular point of view, especially in the tech circles, but I find "buying a big house as an investment when you don't need it" to be entirely absurd.
It’s not absurd. It’s just a different reason for buying a house.
I don’t understand how buying more of one thing is diversification.
Some idea that makes more sense to me is to buy 2 smaller houses, live in one and rent the other one.
This diversifies more and is an example that it can make sense not to buy the biggest house you can afford.
Being conservative debt is a valid strategy, but has risks. Buying the house you need at 25 may not be the optimal strategy if you’re going to be there when you’re 35. Bedrooms and school districts may matter more.
In my own case, my wife and I decided that we would send our kids to private schools and wanted to maximize our family time. So we bought a house in an urban area that was perfect for our goals, had a 10 minute commute and much less expensive than a suburban house of similar nature. We borrowed, but not excessively.
Financially, it’s not a high rate of return (probably about 3% annually). My same house in a town with a good school district would have generated a 10% return. But for me, liberating 150 hours of commuting time and not having a big mortgage was valued higher.
If you own property that you do not use that you rent out for a consistent income stream, then it can be an asset even if you have debt on it. This is because you can easily sell this property in anticipation of hard times (whereas you cannot with a home). And moreover, it should be cashflowing even with the debt service, and anything that produces a real income is an asset. Although, still a risk.
I'm totally in favor of property, but frankly many property 'investors' are not investing. They're either consuming (your current home is a consumable and if an investment, an incredibly speculative one), or flat out speculating (owning property in the hopes appreciation will keep up is actually a bet on monetary policy and the interest rate, not on the actual value of the land / property). Property is only an investment if it makes you money in cash each month.
Also, cars are not a risk-free loan unless you live in an area in which you can accomplish most tasks via walking / public transit / cheap private transit. Most Americans do not. Thus the car is a necessity and the loan ought to be seen as a tax on living in a spread out area. Of course, no one actually thinks about it this way.
We tend to fix about 75% and variable the remaining.
I've seen that for personal loans (done that myself) just never heard of or seen fixed term mortgages
https://www.commbank.com.au/home-loans/interest-rates.html
Check the fixed rate loans
You might want to re-read your terms if the interest rates get much higher.
The interest-rate risk is on whoever owns the bonds to that ultimately funded the mortgage. The value of those bonds is going down as interest rates rise.
Most loans in the US are fixed rate for the life of the loan.