this post was submitted on 06 May 2024
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[–] givesomefucks@lemmy.world 0 points 2 years ago (1 children)

Short answer for why banks like home loans is because they’re a long and, unless you’re doing that shady 2008 sub prime shit, a very safe revenue stream

Sure

If not comparing them to student loans...

Running all that background on mortgages isn't a positive to them, it means fewer mortgages.

Meanwhile they can give any 18/19 year old tens of thousands of dollars that they'll make double off interest.

And nothing except death makes them dischargeable. Even if the loan is never paid back, their return probably beats mortgages because the interest keeps racking up.

[–] Ghostalmedia@lemmy.world 1 points 2 years ago (1 children)

nothing except death makes them dischargeable

There are other reasons why a discharge can occur. Disability, school closure, fraud, etc. Moreover, there are other way to get out of total or partial loan repayment. For example, student loan cancellation and forgiveness. There has been over $160 billion in student loan debt relief during this administration in the US.

By my point is, mortgages are great for banks. They are steady stream of boring and predictable revenue that they don’t need to think much about.

Also, in the USA, outstanding student loan debt is about $1.7T, credit card debt is $1.1T, while outstanding mortgage debt is about $20T.

If you start to look into the national debt stats and the annual reports for the big banks, it will become very clear why mortgages are still a very very popular product.

[–] givesomefucks@lemmy.world 0 points 2 years ago

Yeah, but those are paid off...

The borrower doesn't pay, but the person forgiving it does.

So from the loaners point of view they just lose out of future interest in return for an upfront payment. That can then be used to invest in more debt. It's not that bad of a deal long term.