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Comment by bluGill | Hacker News Reader

Banks don't care though, as they are not holding the mortgage, they are just servicing it. The mortgage itself is held by Freddy-Mac/Fanny-Mae, and sold on to bond holders. The bank is just charging a fee to service the loan, but the loan itself is on someone else's books.

The above isn't 100% true, some banks do hold onto their own mortgages. However it is sill reasonable accurate.

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That should make it even easier. If it has been securitized, the value of that security is way below par value. For example, your $500,000 mortgage at 2.5% might only be worth $300,000 on the open market. Somebody could buy that mortgage backed bond for $300,000 and offer you a $500,000 mortgage at 4% in exchange, resell that mortgage for $400,000 and pocket the $100,000 difference.

If I understand correctly, this is how the Danish mortgage system works.

Good idea, but mortgages are bundled together. You cannot split one off.

The owner of the bundle can.

Yes, well, the hiccup in your plan is someone voluntarily going from a 2.5% mortgage to a 4% mortgage.

The incentive you would have to offer would erase most of that $100,000 difference you pulled out of a hat.

The incentive is the ability to move to a city with jobs without having to take on a 7% mortgage.

I’m not sure it’s quite that simple.

I got a mortgage at 3% some years ago for an apartment. Since then we’ve had two kids and paid off a chunk of the mortgage with our monthly payments. At this stage in my life I’d absolutely be looking to convert that into buying a larger home and would be happy to pay a higher rate for it to happen. But not literally double, which is where rates are today.

Why would you want to take this agreement? It’s equivalent to borrowing more against your house which isn’t inherently good. And we already have HELOC for people that want it

The proposed offer is to get a 4% loan on a different house in exchange for paying off the 2.5% loan on the existing home.

It's good for the bank for obvious reasons, and it's good for the borrower (potentially) because it reduces the cost of moving.

IIUC, the somebody spends 300k (for the 2.5% mortgage) and then an additional 500k (to you at 4%) to ultimately sell a mortgage for 400k which is a net 400k loss but they also now own the original house.

They spend 300k for the original mortgage, and advance you another 500k at 4% for the new mortgage. At this point you owe them $1M. You then pay them 500k from the proceeds of selling the original house. They sell the new mortgage on for 400k, netting $100k. You also are ~$100K better off than if you had to pay $500K to get rid of the original mortgage and then had to borrow $500K at 7% for your new house.

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