Why Other Countries Aren't Worried About 30-Year Mortgage Rates

You don't have to go with 30-year mortgage rates. Consider other options.

Jul 29, 2014 at 10:32AM

A house in Denmark. CreditPoul-Werner Dam via Flickr.

If you're in the market for a new home, you probably care a lot about the prevailing 30-year mortgage rates. After all, 30-year mortgages with fixed rates of interest are the top home loans in America. That's not so all over the world, though. Take a look at some global alternatives and see how you think 30-year mortgage rates compare to other options elsewhere.

At MSN Real Estate, Marilyn Lewis offered some examples:

  • Many Japanese mortgages are "convertible," giving the borrower, after a certain period, the chance to renew for another fixed period or to switch to an adjustable rate.
  • In countries such as Australia, Canada, the Netherlands, and Spain, many mortgages have two components: a fixed-rate one and an adjustable-rate one.
  • In countries such as Canada, Germany, and the Netherlands, many borrowers use rollover mortgages, where the rate is fixed for a set period, and then borrowers renew the loan at regular intervals, at prevailing rates.
  • In the Netherlands, most mortgages are interest-only. You only pay interest and don't gain equity in your home, but you do enjoy tax benefits along the way.

Here are some more interesting features of international loans from a 2010 Research Institute for Housing America report. Compare them with our standard 30-year mortgage rates and terms:

  • In Germany, you can buy interest rate insurance from lenders, and you can lock in rates for several years before actually getting your mortgage.
  • While U.S. loans are typically amortized over 15 or 30 years, Finland offers 60-year amortizations, and you'll find multigenerational 100-year ones in Japan and Switzerland.
  • In Australia and the U.K., some mortgages offer "payment holidays," permitting some payments to be skipped.
  • In Canada, France, and Japan, you can get flexible-term loans, in which the payment stays the same, but the length of the loan fluctuates as prevailing interest rates change.
  • In many countries, if you can't pay your mortgage, it's not just your home that's at risk; lenders can go after your other assets and your income.

If you're now thinking that your boring 30-year mortgage rates rather poorly compared with other options around the world, take heart: Some of them can be found here. Yes, the vast majority of loans these days are 30-year mortgages with fixed rates. But you can get shorter-term and variable-rate ones, too, such as adjustable-rate mortgages (ARMs). With ARMs, your rate is typically fixed for the first few years, and then it is adjusted up or down in accordance with prevailing rates. Since many people only need a mortgage for a few years, these can make plenty of sense.

So don't think you're stuck with your 30-year mortgage rates and terms. There's a world of alternatives out there.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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