I'm constantly reminded to be thankful to be a homeowner in America. Most other countries don't even have fixed-rate mortgages and many of my international friends are facing massive unexpected jumps in their monthly housing costs.
Here in America we face our massive unexpected jumps in the form of medical bills.
Now that I am a homeowner with a 30y fixed mortage, I have many unexpected jumps (thousands in home repairs, increasing property taxes and insurance). Unexpected jumps are way bigger as a home owner than they ever were as a renter.
Oh, and my house value has dropped $100k since I bought it.
In general, I live in quite an old house (1800s) and figure it probably costs me a good $15K/year in taxes/insurance/maintenance/other upkeep not to go into maintenance debt. Can be a lot more or somewhat less.
10% is still a pretty serious increase. In France there's an index that is the max that rents can be increased with, and it's usually at max 6-7% (usually lower), and cannot be increased in areas that have significant housing shortage vis à vis demand.
Depends on which problem you're talking about. People getting priced out of the places they live by increasing rents? That one is solved by rent controls. The other big one, of people being unable to find where to live, is compounded to an extent, but coupled with other efforts (highly incentivised building of affordable and social housing, as well as various programs to help people buy the first time, and incentives to buy to rent (at fixed rates) it's not that bad.
All the renter's protections do create obstacles to renting though, with e.g. landlords demanding proof of salaries at least x3 or a guarantor with such salaries.
And the reason 30 year fixed rate loans are common in the U.S. is because the government (taxpayers) backstop most of the loans. Bank wouldn't be stupid enough to underwrite a 30 year loan at historically low interest rates of 3%.
FDMC/FNMA mostly buy up conforming loans and repackage them. In theory the bundling and government sponsored entity's (GSE) own equity would protect buyers of these repackaged bonds. In practice they did not and the government had to step in.
However, none of this protects against interest rates. If you take a bunch of 2 percent APY loans and bundle them, the resulting bonds are still 2 percent APY and everything seems good from GSE perspective. If rates rise to 7 percent, its just as easy to buy 7 percent rate conforming loans and bundle them into bonds paying 7 percent.
The problem OP brings up is one which the GSEs do not solve: if I own a 3 percent bond but the GSEs are selling 7 percent bonds, I have to sell mine for less than what the GSEs do to compete. The rule of thumb is the asset value drops one percent per APY point below market _per year of duration_. Knowing this, you would naturally shy very far away from mortgages because every percentage point is 30 percent of your delta. (It's a heuristic though, so its not like the example I gave actually trades at a negative price; performs better during "normal" sub 1pct changes.)
In practice people try to find arbitrage opportunities with ever more sophisticated instruments like interest rate swaps to "hedge the risk," but if markets are efficient this is a very small delta that could end up being a negative number. What we saw in 2008 was that the buyers were things like money market funds that prioritized retention of principal, but were dabbling in yield[1] enhancement strategies, given the whole "zero interest rate environment" thing.
[1]: https://www.bogleheads.org/wiki/The_2008_money_market_crisis
“The SVB conundrum”
It's the same way some bonds are callable and others aren't.
At least this is the case in Ireland. I bought my house in cash.
I know a guy who just did a refinance with equity cash out for 30 years. He’s nearly 70. He clearly plans to die broke.
I’m guessing there are much stronger tenant rights in Ireland where they have a harder time evicting the person and making it impossible for them to find housing later. (Credit score, legal records, etc.)
The 4x income and 20% deposit is very common here too. Going past 4x would require unusual circumstances. People doing lower deposits and/or higher ratio incomes are not common especially in the major cities. You might qualify for a special loan from the VA or through FHA but it has penalties like having to pay PMI and being locked to only homes of a certain price.
Reposession in Ireland takes years. And the existence of strong protections against firing means banks only (usually) lend to people with permanent jobs, even if you have years of income on temp contracts.
Note that, for Ireland, this is because you're a second-time buyer. It's 10% for first time buyers.
Today, mortgage rates in the US start at about 6% for a variable rate, or 7% for a 30 year fix. If you have <20% deposit you'll pay about 1% PMI, too. In Ireland, the age of the 2% mortgage is definitely gone, but you'll pay about 4% variable, or 4-5% for a normal 10 year fix. Avant will give you a 30 year fix for about 4%, though there is limited actual demand for such a product in Ireland.
By the way, you can get a mortgage that goes into retirement, though the bank will certainly want to see evidence of a pension... You can also get a mortgage if you're self-employed; you'll want about three years accounts and for either of these cases you'll probably need a broker.
So, really, it's swings and roundabouts to an extent; Irish mortgages are a lot cheaper than US ones. To some extent this is structural weirdness; the banks have more deposits than they know what to do with, and under ECB stress testing rules they have limited things they can feasibly _do_ with those deposits, so their cost of funds is relatively low.
It's the same shit everywhere in the west. Real estate is priced at the maximum amount the market would bear.
And the market would bear to pay the amount banks will allow buyers to borrow (to first approximation).
So if banks allow 30 year mortgages, the market would bear up to 50% or so more than if banks allow 20 year mortgages.
So yes your statement is true, because most people can never buy a home so there's no loan involvement at all.
But I'm pretty sure that's not what you wanted to say.
If you have ever taken a mortgage in the US, you know there are a lot of time horizons available.