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.

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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() | 05.25.17 @ 16:22

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