As a student who looks forward to eventually buying their own house, this article piqued my interest. Long term mortgages, which is the most typical method of purchasing property, is how most people my age look forward to buying their homes int eh future. This article showed that houses have become less affordable even if their market price has not increased. This is because fixed rate long term mortgages are the most common type of loan for houses, which includes the aspect of an interest rate imposed on the property value. This portrays that a person buying a house with an interest rate of 3% will pay significantly less than a person buying the same house with a rate of…
For my third Teach EcoKnowmics blog, I chose to read "A 30-Year Trap: The Problem With America's Weird Mortgages" from The New York Times. This article talks about how America's 30-year fixed rate mortgage system is causing issues with the housing market. Interest rates for this kind of mortgage have increased several percent over the past couple years, which means that people buying houses today may be spending thousands more dollars on each mortgage payment than people who bought houses a couple of years ago. The increase was so sudden that people who bought houses within a few weeks of each other might have drastically different interest rates. Both buyers and sellers are feeling negative effects from high interest rates.…
The article gives a great history of the mortgage industry and provides background on parts of home lending that I did not previously know. The author offers an accurate summary of the current state of our mortgage and housing sector that has both supply and demand side challenges. The supply side challenges are felt as the housing sector has expanded rapidly over the last 5-8 years with significant growth in demand. The writer references the historically low rates that fueled this expansion but does not talk about the pent-up demand that resulted from the COVID pandemic. Both were factors in the up bidding of home prices across the country. Secondly, the author discusses the current plight of interested home buyers…
As a student who looks forward to eventually buying their own house, this article piqued my interest. Long term mortgages, which is the most typical method of purchasing property, is how most people my age look forward to buying their homes int eh future. This article showed that houses have become less affordable even if their market price has not increased. This is because fixed rate long term mortgages are the most common type of loan for houses, which includes the aspect of an interest rate imposed on the property value. This portrays that a person buying a house with an interest rate of 3% will pay significantly less than a person buying the same house with a rate of…
For my third Teach EcoKnowmics blog, I chose to read "A 30-Year Trap: The Problem With America's Weird Mortgages" from The New York Times. This article talks about how America's 30-year fixed rate mortgage system is causing issues with the housing market. Interest rates for this kind of mortgage have increased several percent over the past couple years, which means that people buying houses today may be spending thousands more dollars on each mortgage payment than people who bought houses a couple of years ago. The increase was so sudden that people who bought houses within a few weeks of each other might have drastically different interest rates. Both buyers and sellers are feeling negative effects from high interest rates.…
The article gives a great history of the mortgage industry and provides background on parts of home lending that I did not previously know. The author offers an accurate summary of the current state of our mortgage and housing sector that has both supply and demand side challenges. The supply side challenges are felt as the housing sector has expanded rapidly over the last 5-8 years with significant growth in demand. The writer references the historically low rates that fueled this expansion but does not talk about the pent-up demand that resulted from the COVID pandemic. Both were factors in the up bidding of home prices across the country. Secondly, the author discusses the current plight of interested home buyers…