Bethany McLean is correct that the 30-year mortgage is an outdated product (“Who Wants a 30-Year Mortgage?,” Op-Ed, Jan. 6). It was created in the 1940s, back when Americans lived in the same house for most of their lives. Today, the average American either moves or refinances every five to seven years.
As Ms. McLean argues, financial institutions should keep their mortgages on their books. Up north, Canadian banks hold more than two-thirds of their loans. And their rates are fixed for a statutory maximum of five years.
During the recent recession, while about 14 percent of American mortgages were in arrears, fewer than 1 percent of Canadian mortgages were in foreclosure or delinquent.
Today, the 30-year mortgage is undermining our economy. Shorter-term mortgages with lower rates and payments make better sense for both banks and borrowers.
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