This doesn't seem like a complete solution, as the article notes. The seller would have to find another assumable loan to be able to buy an equivalent replacement home.
Taken to the furthest conclusion, the home-owning class would eventually trade houses only amongst themselves, which leads to a need for a housing currency or trading pool to make trade easier.
A big part of the psychology of home buyers is about resale potential or value. This is why, for example, single people care about school districts, people buy more bedrooms than they need, etc.
So to resell an assumed mortgage, you have to find a buyer that can pay the entire unmortgaged principle (i.e. down payment + already paid principle) plus any increase in value. If that buyer is another home owner with a low rate mortgage, they may have to find another buyer like themselves to assume their current mortgage.
The assumption itself likely requires the new buyer to be as qualified as the current owner as well.
So this is maybe attractive right now, where there are many of these low rate mortgages with high loan to value ratios, but it will get progressively worse. Add that on top of the friction and reduced addressable buyer market, and my intuition is that this is probably a wash at best.
1. The low interest rates only last for up to 30 years and the principal decreases with every payment, so I don't see this creating a "home-owning class".
2. Right now there's also the problem of homeowners not wanting to sell because that would mean giving up their low rates. This hampers supply and makes it harder for first time buyers to make it into the "home-owning class".
I dont want to sell because moving is a hassle ... and i couldnt afford another house around here. I dont want to refinance because of rates.
My mortgage specifically says it is non transferable too.
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[ 9.2 ms ] story [ 666 ms ] threadTaken to the furthest conclusion, the home-owning class would eventually trade houses only amongst themselves, which leads to a need for a housing currency or trading pool to make trade easier.
So to resell an assumed mortgage, you have to find a buyer that can pay the entire unmortgaged principle (i.e. down payment + already paid principle) plus any increase in value. If that buyer is another home owner with a low rate mortgage, they may have to find another buyer like themselves to assume their current mortgage.
The assumption itself likely requires the new buyer to be as qualified as the current owner as well.
So this is maybe attractive right now, where there are many of these low rate mortgages with high loan to value ratios, but it will get progressively worse. Add that on top of the friction and reduced addressable buyer market, and my intuition is that this is probably a wash at best.
2. Right now there's also the problem of homeowners not wanting to sell because that would mean giving up their low rates. This hampers supply and makes it harder for first time buyers to make it into the "home-owning class".
Anyone know where to find listings like this?