Economist Recommends Eliminating The 30-Year Fixed Mortgage

Housing industry leader points out the failings of the 30-year fixed-rate mortgage

Economist Recommends Eliminating The 30-Year Fixed Mortgage
April 27, 2016

Edward Pinto, the co-director of the Internal Center on Housing Risk at the American Enterprise Institute, has called for the elimination of the 30-year fixed mortgage. In his article, Pinto makes a number of observations about the mortgage and explains why the current proposal penned by a group of economists that builds upon the 30-year fixed mortgage as a way of revamping Freddie Mac and Fannie Mae is not the solution the housing market needs. Pinto goes on to say that such a plan fails to take into account previous plans that have failed and in fact may lead to another housing crisis.

One of the issues Pinto has with the 30-year fixed mortgage is that it does not help homeowners build up wealth. Many homeowners with a 30-year mortgage carry that debt into their sixties, and some retire still paying on their homes.

This mortgage option also, according to Pinto, is a poor option for many potential buyers. With new home prices continuing to rise while household income stagnates, borrowers who fall into the low-to-moderate income levels may have to make a choice between taking on a large debt or watching the properties they want continue to increase in price until they can no longer afford them.

Pinto also blames the 30-year fixed mortgage as the driving force behind the housing crises of the early nineties and the more recent one in 2008.

Moneytips can help you refinance your existing home loan.

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Miami Beach Realtor | 04.30.16 @ 18:21
I agree completely. Buying real estate is the smartest move you can make, but carrying that debt for half of your entire lifespan can't be the best way to achieve it.
$commenter.renderDisplayableName() | 11.27.20 @ 13:36