No interest mortgages…hmmm…they can’t work and they shouldn’t work. I loved a recent Wall Street Journal article that speculated on the possibility (and the impact) of such an opportunity.
Guess it may be intriguing to think about, (hey, I’d like to be 6’10” and play center for the Lakers), but there are a zillion issues that would hinder this from being a viable solution to bring buyers into a flooded market. Something’s got to sop it up, but giving money away isn’t the answer.
The Federal Reserve is committing to taking remarkable steps to keep the economy moving in the right direction and that’s the stuff of lower interest rates…but where would it end?
The thing is…there’s no way to fund such a proposition; money can’t be lent for free. Money for mortgages comes from bonds issued at rates lower than the mortgage they fund, so would the investor then pay the bank to let them invest in bonds?
The Catch-22 of today’s real estate market is that the home prices and interest rates are at historic lows; but roughly 33% of Americans don’t have the credit history to buy and only half of the country has the FICO power to get the best rates.
At the end of the day, it’s a terrible irony; but that doesn’t mean that Dire Straits should dictate crazy solutions.