Be Careful What You Wish For

An article in today’s NY Times expresses a fear that has been bothering me for a while: That if Fannie Mae and Freddie MAC go away, so may the 30-year fixed rate mortgage. I’ve been worried about it since I heard a Planet Money podcast on how a 30 year fixed rate mortgage is a Frankenstein Mortgage that no private banker in their right mind would want in their portfolio, for there is too much risk over 30 years. They want variable rate mortgage, which are much less risky, and much shorter terms. The same conclusions are in the NY Times article:

The 30-year fixed-rate mortgage loan, the steady favorite of American borrowers since the 1950s, could become a luxury product, housing experts on both sides of the political aisle say.

Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs.

Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan.

The net effect of this would likely be to make homeownership much harder to achieve for those not already in the market. In other words, those that have are screwing the have-not again. This seems to be a general attitude I’ve been seeing in America of late (which I don’t like): I’ve got mine, screw you. We want to attack someone else’s pension, someone else’s bargaining rights, someone else’s ability to get married, someone else’s ability to do things with their body. But when it comes to our precious entitlements, no, no, don’t touch them. We’ll play with someone else’s pension, but not my social security. We’ll play with someone else’s health care, but don’t touch my medicare.

I’m really worried I’ll end up in a society with everything that everyone else has wished for.