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Comment by dotBen | Hacker News Reader

I live in perpetual wonder that here in the US I have locked in a 30 year 2.3% mortgage, which I use for leverage, whereas back home in the UK people have to refinance every 2-5 years and so their mortgages trend roughly over the prevailing base rate for the term of the mortgage.

Yes this article is about commercial real estate but it shows something is actually very broken from a credit market perspective - my loan is probably going to be underwater for the financier (JPMC assumed from FRB) for the rest of the term (just on the fed rate, but then I'm also making a margin on the leveraged capital. And tax deductions on the interest.).

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> I have locked in a 30 year 2.3% mortgage, which I use for leverage

> but then I'm also making a margin on the leveraged capital.

Do you mind expanding on this? I’d like to understand what you are doing, as a fellow ridiculous mortgage holder.

It's called a humblebrag. Person responded offtopic to demonstrate how savvy they are investing, then steered back on topic with a brief anecdote.

A not very degen version of this is taking money that you might spend on your mortgage at a rate under 3%, and putting it somewhere safe that earns more than 5% (not hard to find).

Isn't what you describe using your own capital to use as an investment instead of paying down the mortgage?

How do you use the leverage (debt) from the mortgage to put in a 5% investment?

I already owned the house free and clear. Was offered stupid (good) terms for a mortgage so I took it. Used the money to create a return that pays back the monthly interest and principle while still creating a return AND tax deduction.

Ah, thanks for the explanation. Unfortunately not something I can do.

Don't cry for JPMC. They most likely hedged the interest rate risk when they bought the bundle that included your mortgage (or some slice of it). I doubt that they are really underwater, at least not by much.

You can get a fixed 30 year mortgage in the UK. Most people choose not to. There's nothing intrinsicly different about mortgages in the UK compared to the US.

Was there any point when you could get a 30 year fixed loan at 3% in the UK?

It makes sense that some banks might be offering them now at 7% since they have little to lose but I don’t think low interest longterm fixed mortgages are really possible without significant government interference (like in the US).

All this is true. The US government does significantly subsidize home loans. However they do this for all lengths of mortgages, not just the long ones.

At that rate? lolno. When interest rates were low you would pay more than that for a 10 year fix. Now with high interest rates one bank is bragging about having the longest fixed rate mortgage at 15 years. The US government strongly incentivizes long-term low-rate mortgages in a way the UK government does not.

You guys are moving the goal posts. He said you can't do it, now you say it's not as cheap. That's with hindsight of where the interest rates went. If they had gone up it would have been a good deal.

The cost is the whole point. Any 30-year mortgage that might be on offer in the UK (turns out, actually none at all available to the average homebuyer) would be a far worse deal, even given the interest rate changes we've seen.

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