Imagine what housing markets might look like in this scenario.  What if consumers could take out a mortgage for 30 or even 40 years at a fixed rate and be guaranteed that the mortgage could move with them as they needed to change houses or relocate for jobs?  If they needed to move, a fee, maybe 3% of the outstanding principal, could be due as a fee to compensate lenders for the re-securitization and appraisal expenses.  A 3% fee for additional principal could be paid to add to the loan if needed and if the applicant(s) is/are qualified.  Having the option to take out a relocatable mortgage could come with a prepayment penalty that would discourage consumers from dumping a mortgage if the rate moderated, as happens today.  It would completely upend the entire lending industry as structured today, but they could adapt, as many other occupations have had to in the current information economy.  
 
This would help the market in several ways: 
This would iron out the swings in the housing market caused by interest rates, which have contributed to the housing shortage in the USA. 
Programs might be set up with tiered rates, offering a lower entry rate to help young people start on a path to home ownership. 
The sooner young people can begin building equity on home ownership, the faster they can move up to larger homes (that use A LOT more hardwood) 
People would be freer to relocate to the best job, improving productivity by deploying intellectual capital in the best locations. 
 
Thinking bigger than a $25,000 subsidy, which will just be inflationary and add to our debt, might sound like a great political soundbite, but it is not the solution.  
 
Addressing the financial side of home buying from the basic points above might be one way to start fundamentally changing home ownership to get markets moving.  Attacking this and over-regulation is another part of the answer.  Next, municipalities and governments need to start looking at themselves in the mirror and figuring out that all the fees for taps, permits, schools, etc., significantly contribute to the high homeownership price.  Incentivizing builders through reduced fees could lead to more units and more people owning homes.  At some point, the billions of dollars governments spend on sheltering the homeless could be better used to support the fee base currently counted on from new construction.   
 
We need to consider the bigger picture and devise private programs that create ownership opportunities and even out consumer exposure to interest rate swings.  Government involvement needs to be minimal as they add cost through additional regulations.  Large mortgage lenders can look at new products that might help break through the logjam on the market now.  Portable mortgages now work in the UK and in Canada, to a limited degree.  It’s time lenders in the USA designed programs that work over the long haul to the benefit of their shareholders and consumers.  If the USA is the world’s leading economic power, generating more than 20% of world income, one would think that mortgage lenders and elected leaders can take a fresh sheet of paper approach to something that doesn’t seem that hard to solve.   

Rick Barrett

Cascade Sales Manager