Is the 30 year fixed mortgage going away?

March 18th, 2011

Does it really matter?  I’m not so sure.  The 30 year fixed mortgage is more of a psychological comfort than a financial necessity.  If the 30 year fixed option goes away that doesn’t mean that a 30 year mortgage is not longer available.  5, 10 and 15 year fixed mortgages that roll into adjustable loans will still be an option.  Since the lender isn’t stuck with a set rate for 30 years the interest rates are typically lower too.  Add the fact that home buyers in the Oakland, Piedmont and Berkeley real estate markets do not typically stay in their homes for more than 7 years, the 30 year fixed mortgage is a costly loan product that doesn’t usually doesn’t return on the investment.

There is no doubt that the lending environment went completely out of control and many people got loans that shouldn’t have, but the doomsday theorists out there predicting that the industry is going to turn upside down because of the elimination of the 30 year fixed loan are mistaken.  They seem to forget about the ingenuity and profit hungry creativity present in the banking industry.  Current loan options and the new products being conceived in banking think-tanks will fill any void left by the 30 year mortgage disappearance.

If I were to worry, I’d worry about disappearance of the independent mortgage broker.  Mortgage Bankers have lobbied lawmakers hard under the illusion of consumer protection and with the objective of regulating independent mortgage brokers out of existence.  I totally agree that some mortgage brokers are schmucks and should be out of the business, imagine a lending atmosphere where there are only 5 large banks offering loan products.  Who do you think will be served, the consumer or the banks share holders?  Less competition in the mortgage and loan industry is most likely going to result in less choice for the consumer higher prices for loan products.  But I’m sure we can count on self regulation and self policing by the banking industry, right?  Hmm, déjà vu all over again…

Brian Santilena, Sr. Sales Associate and top real estate agent with Pacific Union Real Estate, works with home buyers and home sellers in the Oakland CA, Berkeley CA and Piedmont CA.  He is a Realtor, Certified Residential Specialist(CRS) and is highly knowledgeable in area condos, single family residences and income properties up to 4 units.  Some of the neighborhoods he serves are; Haddon Hill, Rockridge, Upper Rockridge, Montclair, Glenview, Trestle Glen, Crocker Highlands, Oakmore, Laurel District and Redwood Heights.  Berkeley Hills neighborhoods such as Northbrea, Westbrea, North Berkeley Hills, Berkeley Flats, Thousand Oaks, South Berkeley, Gourmet Ghetto, Elmwood, Uplands, Claremont, LeConte.  Please feel free to CONTACT BRIAN if you have any real estate needs in Oakland, Berkeley or Piedmont CA. If you’re interested in Brian’s Rockridge site check out http://www.HomesInUpperRockridge.com

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