What if Mortgage rates are negative?

Sep 22, 2020 6 Comments

Mortgage rates are historically low. Now imagine if the rate goes negative - that's we get paid to take mortgage and buy house? Still we need to pay some portion of principal, but that's reduced by the negative rates.

What will you do?
I will buy a bigger house in Bay area.

TC: rate is negative. Does it matter?

#finance #mortgage #housing
#investments


News that inspired this post:
https://finance.yahoo.com/news/natwest-ceo-says-already-preparing-093355310.html

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  • Meketa
    falcon11

    Meketa

    falcon11
    They are already negative in some parts of the world
    Sep 29, 2020 0
  • The rates are low enough now that it is enticing but hasn't driven me to purchase a home yet. If the hypothetical scenario of negative mortgage rate does come to be true, then yes I will buy a house, somewhere in the orange county in California or perhaps bay area as well.
    Sep 22, 2020 0
  • Reddit / Eng
    Is2sU6

    Go to company page Reddit Eng

     Is2sU6
    Can't imagine a negative mortgage interest rate for this market. The only model I know of is IS-LM, and I know how to create negative interest rates with the model. I'm just not sure how to practically do it for the mortgage market.

    What would cause negitive interest rates in the mortgage market, OP?

    If it does go negative, I'm going to pour even more of my net worth into RE. I'm already over leveraged, so I might as well bet on that being a good wealth building opp and take full advantage.
    Sep 22, 2020 1
  • Fun idea, but nothing more than that. You’re trajectory is accurate though. Yeah, hypothetically you’ll see even more home buyers than you already do. Conversely, you’ll see home prices shoot higher than they already are
    Sep 22, 2020 0
  • Citibank / Finance
    MMT2020

    Go to company page Citibank Finance

     MMT2020
    I think the Fed’s balance sheet would have to expand to twice its size before we’ll see negative interest rates in the United States
    Sep 22, 2020 0