The growth of ARM mortgages over the past 5 years is said to have been the main catalyst of the housing boom. As ARM’s fall out of favor, the fixed mortgage has come to the rescue. With the US Treasury re-issuing 30-year bonds again, lenders have a better idea how to price 40 to 50 year mortgages [Washington Post]

The longer-term mortgages would lower monthly payments.

To the extent more consumers have more products available, it will be a help for affordability,” said Douglas Duncan, chief economist at the Mortgage Bankers Association.

Don’t expect borrowers to stick with these loans for the full term. He said these homeowners are likely to eventually refinance into 15-year or even 30-year loans to repay them faster.

Its the same concept as ARM mortgages:

Its all about lowering the mortgage payment.


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