If I can take the profit on one and roll it into buying down the disposable income needed to afford a loan on another - which I can do in a falling interest rate environment - there should be not only a point of equilibrium for my relative purchasing power but also theoretically there will exist a point in which simply owning an appreciating asset would have been enough to have parity with whatever my overall purchasing power was, minus the asset. It’s the same function with the same saddle point.
robocat|1 year ago
Okay, on rereading: one problem is that I have never heard of "buying down" because I think the concept doesn't exist in the New Zealand market. The US market for mortgages is extremely different from most countries. I wrote my comments generic enough to cover both (I hoped).
Buying down is not a neutral option: I presume it is making a bet on the future of interest rates. So I'm not sure your logic follows. If we want to make interest rate bets then there's lots of different worms we can eat.
The information gap remains!