To the Point With Bob: The 30-Year Fixed-Rate Mortgage Is the Bridge from Renting to Homeownership
(To the Point with Bob is a periodic blog by MBA President & CEO Bob Broeksmit, CMB.
You can view this and past blogs here)
Below is a Letter to the Editor that MBA sent to The Wall Street Journal earlier this month in response to a baffling opinion article that criticized 30-year fixed-rate mortgages, including calling them “predatory” and a “scam.”
MBA will always promote and protect the benefits of 30-year mortgages and homeownership!
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To the Editor:
I checked the date on my Journal after reading “The Case Against 30-Year Mortgages” (Oct. 8) to make sure it wasn’t an April Fool’s joke.
Calling the 30-year fixed-rate mortgage “predatory” and a “scam” is an attack on one of the core pillars of middle-class wealth creation and financial stability. The author grossly misrepresents a financial product that, for nearly three-quarters of a century, has helped tens of millions of families achieve the dream of homeownership, move up the economic ladder, and build lasting memories along the way.
America’s housing market is the envy of the world precisely because it’s accessible to consumers across a wide range of financial circumstances. The 30-year fixed mortgage provides unmatched stability, allowing homeowners to lock in consistent monthly payments and shield themselves from rate volatility – something renters simply don’t have. And I doubt the millions of Americans who refinanced into 3% mortgages during the pandemic feel “victimized” when they make their monthly payments.
The author also exaggerates the supposed “distortions” in the housing finance system. In reality, the federal backstop lowers costs, increases liquidity, and spreads risk more evenly. Without it, borrowing would become more expensive, and homeownership would be less attainable, especially for first-time and middle-income buyers.
Yes, affordability is a challenge, but that stems from a decade of housing supply-demand imbalances, not from the structure of mortgages themselves.
For millions of Americans, the 30-year fixed mortgage is the bridge from renting forever to building generational wealth. The real scam would be taking that opportunity away.
Sincerely,
Bob Broeksmit
President and CEO
Mortgage Bankers Association
1919 M ST NW #5th floor 20036
Washington, D.C.
