No more 30 year mortgages?

Question

Jesse T. · Answer

For most homeowners a 7 to 10 year fixed ARM will work, given the average frequency of moving.  The question really will be how much more that costs in the private market than current 30 year rates.

I think there may be a slight "reset" of price when buyers feel a little less comfortable because they can't lock in for 30 years.  However I don't think that will lead to a full on melt-down.

I think the biggest impact is likely to be what the higher rates of a mortgage market with less governmental support.

I do think that higher interest rates and shorter terms will lead to increased demand for rental housing.

Jay C. · Answer

Why are we paying interest at all? Why does the government sell money to banks at low to no interest and they in turn mark it up to the consumer.  I think I want Uncle Sam in the home mortgage business and giving me a 30 year fixed loan at 00.25 %

Neil Aggarwal · Answer

I think this is one of those things that stirs the pot but will never happen.

Lynn McGeein · Answer

Doubt we have anything to worry about.  Excerpt from:

"America's mortgage-insurance giants are making bigger profits than before the crisis"

From this month's Economist:

"The fact remains that both Fannie and Freddie have emerged from the financial crisis churning out more profits before tax than they ever have before (see chart). Who benefits most from this is a subject of controversy. The government, having bailed out Fannie and Freddie in 2008, owns most of the pair. Other shareholders own 20%, but Barack Obama’s administration in effect expropriated these stakes in 2012: virtually all earnings now go to the Treasury. "

Jonathan Key · Answer

No way that will work for home buyers. But the REI that practices the buy and hold model will do well, and rental rates will go up.