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most mortgages in the US are still immediately repackaged/sold
This is a feature, not a bug.
The only way that 30 year fixed rate mortgages work is if they can be held by someone that has 30 year liabilities to fund them with. The average bank is funded with current accounts and shortish-duration savings products so cannot do this. You need to put them in a form that an insurance company can buy (i.e. MBS). Done right, with a government credit wrap, it's a beautifully efficient system.
NickCJ-
Weirdly though, the US have that with Fannie Mae anyway, so it seems peculiar that they still need the repackaging. I'm not going to pretend I know how all this works — i'm sure with the right regulation, it could still be a good system.
And, as here, hasn't the 'money multiplier' income model for banks been debunked somewhat, since private banks create new money with new lending?
(Gonna change my username now — don't want work checking up on me chatting shit about banks during work hours…)
slippers
There's nothing inherently wrong with sub prime mortgages, either. It's a social net positive for people to have a secure home, even if purchased with 100% mortgages and temporarily underwater with some reasonably small amount of negative equity. It's still cheaper and more secure than renting if you're buying a place to live for 4+ years.
Sadly we didn't seem to learn the right thing from '08 — most mortgages in the US are still immediately repackaged/sold, and a lot of regulation added here was more about putting the boot on potential borrowers (higher deposit requirements, stress test), rather than the banks taking on a bit of risk, reflecting it in slightly higher rates, and not allowing bonkers housing inflation for a decade.
More recently, too, when all >90% mortgage products were removed, it'll only keep more people out of homeownership, and in insecure tenancies.