The Cost of Surrendering the 30-Year Fixed Rate Mortgage Loan
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Office of Communications and Public Relations
March 9, 2011
Professor Tanya Marsh’s latest post on the Huffington Post.com takes on the New York Times and the 30-year fixed rate mortgage.
“The New York Times ran a story earlier this week suggesting that if Fannie Mae and Freddie Mac cease to exist, the 30-year fixed-rate residential mortgage loan would become a “luxury” product rather than the norm. This kind of shift could have profound economic consequences that policymakers need to carefully consider.
“As the story noted, the 30-year fixed rate loan is an aberration that exists primarily because of government support. There are three key characteristics of the now-typical loan that merit discussion: (1) its long-term nature; (2) the fixed interest rate; and (3) the full amortization.”