Comment by mountainb
2 days ago
There is a conservative case for this in that the 30 year fixed mortgage, combined with all of the foreclosure protections both old and new, amount to a government benefits program. Historically, this type of mortgage was developed to promote family homeownership. The mortgage systems have continually blown up in "crises" in part because it's a product of policy more than it is a market product. This is partly why investors both corporate and small flipper types actually do cause serious distortions: the US housing market is a welfare program first and a market for bundled land and houses second.
No one wants to abolish this welfare program (you would have an easier time abolishing Social Security), but also the government wants to keep the trappings of a market price system. It is easier to have serial crises and to blame some guys for the predictable explosions every time, adjust the laws to create enormous numbers of lawyer billable hours nationwide, and then set the stage for the next crisis and the next round of patsies to be blamed. Fortunately, this time we have AI to write all the think pieces about what it really means.
I mostly agree with your comment except the part where flipper types and corps cause distortion because they have 30-year mortgages at their disposal. A fixed rate, 30-year is distortionary on its own; it's a uniquely American "product" and banks in other countries would look at you crazy for requesting such a thing.