G'day Sunstone,
What a question? Seriously - I'd always just accepted "the norm" so thinking outside "the norm" is a bit new.......
But, I would think that one of the major reasons would be that Banks would "miss out" on all of those lovely "exit fees" as people finish their "7 year stint" and want to move on....
Assumable loans would likely have some fee to change names, but with Banks getting "exit fees" from the seller, AND application fees etc. from the buyer, why would they want to make it EASIER (cheaper) for us minions??
What would be required to change this in Australia? Well, again, guessing .... Lobbying, selling Banks on the benefit of introducing such a deal - more investors would FLOCK to THEM if they were doing it, etc. Huge volume with minimal cost, rather than low volume with maximum cost....
Thinking of current reality, though, how useful is it to have a loan (assumable) of $200k on a $500k property? If sellers want $500k, then any other loan would be a second mortgage..... not likely to work so well..... But, on new-ish property, where the buyer is willing to exit for pretty much what they paid, it could work.
Thinking further, I suspect that the USA system of allowing PPOR to be Tax exempt would have people "upgrading PPOR" far more often, thus not allowing too much "paying down" of mortgages - thus the gap between "what its worth" and "what they owe" would not be too big...
So, is it likely that assumable mortgages would only work under a different Tax system????
Mate, I don't know - just some ramblings - but you never know just what might come from them.... Let's see what others come up with
Regards,