10-13-26 spal
The term "portable mortgage" is a marketing shorthand for a contractual rate-transfer option,
So good luck finding this anywhere in rising rate environments. |
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10-13-26 spal
When commercial banks in certain jurisdictions (such as the UK or Canada) advertise a "portable mortgage," it is not the underlying legal security instrument that moves.
Instead, it is a contractual feature within the credit agreement where the lender promises:
"If you pay off Loan A upon selling Property A, we will execute a completely new Mortgage B on Property B and grant you an interest rate blend/discount that mirrors the rate terms of Loan A."
It requires a full legal closing: title search, appraisal, new mortgage deed execution, and registration of a brand-new lien against Property B.
The term "portable mortgage" is a marketing shorthand for a contractual rate-transfer option, not a legal property of the mortgage security itself. Because a mortgage is an in rem encumbrance on a specific title, the original lien must always be extinguished upon sale, requiring an entirely new security instrument to be drawn up for any replacement property. |
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10-13-26 spal
| Savo - on portability you are correct on the economic effects. Concerning the idea itself it is essentially a non-starter due to the fact that mortgage security interests are registered directly against a specific real estate title deed (in rem). Substitution of collateral is a very rare legal process. Upon sale of the physical property, the underlying lien must be satisfied and extinguished. The loan cannot simply "follow" the borrower without executing a new security instrument on a new asset. The concept of "portability" is not easily applicable to the mortgage concept itself. It is not a characteristic of the arrangement. |
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10-12-26 spal
| Carib the spread (net interest margin) is indeed wider in the US than Europe, but not for fun, but for many distinct structural and operational reasons between the markets most of which is too boring to go into. |
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10-12-26 victor
EU approves biggest Russia sanctions package since invasion began
“This is the single largest expansion of our sanctions list since Russia started its war,” Kaja Kallas said.
The bloc’s foreign ministers approved the package during a meeting in Luxembourg, adding 1,600 new listings “targeting Russia’s military-industrial complex,” the EU’s top diplomat Kaja Kallas said on X.
“This is the single largest expansion of our sanctions list since Russia started its war,” she added. “More than half are connected to the production chain for ballistic missiles.”
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10-12-26 savo
carib... IMHO would lubricate the market with positive effects.
i need you to explain this to me again... because i can't see the positive effects.
If mortgages were portable.... those who were able to obtain a 3% mortgage some years ago would have an advantage over new comers who didn't...hence creating a two tiers society where those that bought with 3% continue buying with 3% (hence bidding up prices) and those that didn't face the kind of prices that exists when rates are 3%
If market rates double then you want home prices to halve...so that people can still afford them.
The mechanism for that to happen is for mortgages "not" to be portable.
Of course politicians do not want prices to halve...because that would create another array of problems... including that most peopl, when old, count with the value of their homes to downsize and in live when retired...or the the state guarantees to fannie and freddie.
But if the government were sincere about making homes more affordable they should want home prices to go down... not up.
As for salaries... which spal mentioned... wasn't the case that AI will make most labor redundant? How can jobs be lost and real salaries go up for the majority? productivity was the old answer... but for productivity to increase salaries... first you need to have jobs. |
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10-12-26 carib
| SPAL: the rebalancing mechanism you mention is indeed what has prevailed in the past, but the problem now, if rates remain high for long, is that a increasing portion of the RE market remains frozen, which is not healthy in my opinion. I am not talking of 10MM$ apartments, but about those below 1MM$. |
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10-12-26 carib
I can make the example of my american daughter, who has a 3% fixed rate 30Y mortgage, costing half of what she would have to pay now.
If she wants to move to a better place, the best solution would be to rent that property, let rental revenue pay the mortgage, and buy a new house paying cash, given she has cash, looking for someone who really needs to sell..
But this is not really an optimal solution, in systemic terms. |
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10-12-26 carib
Savo: I have no personal interest in portable mortgages in the USA, as I have no property or mortgage there. I am just interested in the systemic effects. Lots of reports I read say there is a slowdown in RE transactions because owners with cheap mortgages lose too much if they move to upgrade or downgrade. If mortgages were made portable by law (subject to no reduction in market value of the collateral) that IMHO would lubricate the market with positive effects. Mortgages should become more similar to bonds, with an active secondary market, IMHO.
Your remark about refinancing fuelling consumption is well placed, IMHO. |
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10-12-26 carib
| SPAL: I am certainly no expert, but my impression is in the USA spreads between active and passive rates are way too wide, compared to europe. |
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10-12-26 carib
SPAL: it was a WSJ podcast.
I have a small US account. JPMorgan pays 0,2% interest.
I asked if they would pay more if I deposited significant cash. They offered CDI and term deposits.
In the old times of actual interest rates, in the EU current bank accounts pid interest as a matter of course.
Banks, IMHO, are getting an excessively sweet deal.
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10-12-26 spal
Savo - the market slows and rebalances over time.
Affordability can rebalance through price drops, rate cuts, or wage growth. Instead of nominal prices crashing 50%, housing affordability typically resets through years of sideways nominal price stagnation (or mild real drops) while wages and inflation gradually close the gap.
Public homebuilders are absorbing rate pressures by offering permanent rate buydowns (e.g., buying a 7% rate down to 5.5% for the buyer) rather than slashing sticker prices. Meanwhile, private equity and institutional funds act as a floor under asset values.
However floating rate resets are coming in the multifamily market. |
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10-12-26 spal
Who is writing what in the WSJ?
The pool of uncompensated bank liquidity is c.$4 trillion, not $20 trillion.
Much of that $4 trillion consists of corporate payroll and daily transactional liquidity that needs operational features (same-day ACH, overdraft facilities, merchant processing) more than yield.
Of the remaining $15.7 trillion - already in interest-bearing accounts of some sort - banks are actively competing on rate to retain those funds. If the Treasury offered a blanket 3% direct yield, money would migrate primarily from commercial interest-bearing accounts yielding under 3%, rather than from pure 0% checking balances. Banks would then put all other rates up to compensate - more crowding out etc.
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10-12-26 savo
if home prices go down 50%... what will happen to those owing money on houses worth less than the mortgage? will they return the keys...? and what will happen to the lenders?..
I keep on asking myself where are all those mortgages?
Freddie and Fannie are going bankrupt ...again...
but banks must have mortgages too... I do not buy the idea that they sold all of them...they have to be somewhere. |
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10-12-26 savo
carib... on the subject of portable mortgages of which I do not know anything because i never had one... portable or not...
I am interested in the effect on the economy of mortgage rates going up.
For 40 years the US had falling rates and increasing housing prices...People refinancing put money in their pockets extracting equity and also reduced rate...Meaning more money for consumption on two accounts fueling the economy in a keynesian way ie with more inflation.
That is now in reverse...no more refi as nobody will refinance at a higher rate... no more equity extraction as there is no refi...so no more fuel on any account...
but there is an additional problem...rates are going up but property prices have not gone down... meaning property prices remain priced for a world in which mortgage rates are 3% not 7%...
and maintenance cost have gone up too.. taxes... insurance...etc..
how much do housing prices have to go down to compensate?...50?
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10-12-26 carib
Academic stupid question: if the US treasury would allow all US persons to open an on-line account paying 3% on balances on a daily basis.. would that not reduce borrowing costs?
(of course commercial banks would not be pleased) |
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10-12-26 carib
Interesting fact: the amount of cash sitting in US bank commercial accounts, mostly not earning interest.. is around 20 trillion $
(WSJ) |
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10-12-26 carib
ft
Donald Trump’s diesel deal with Vladimir Putin has angered members of his own party, who joined with Democrats in claiming that it was against the law.
Seven senators, including four Republicans, on Sunday called on the US president to “immediately reverse course” on his deal to purchase millions of tons of diesel fuel from Moscow, calling it a “financial lifeline” to a murderous regime and a violation of US law.
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10-12-26 carib
| Savo: actually.. simple thinking, assuming the maga voter is a simpleton. |
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