The problem with the American 30-year mortgage
Jul 9, 2024
Episode 1199

The problem with the American 30-year mortgage

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Is it time to switch it up?

The 30-year fixed-rate mortgage is as American as apple pie. But it wasn’t always this way, and it’s putting the housing market in a tough spot lately.

A substantial amount of homeowners with low-rate mortgages are choosing to stay put in their homes rather than selling and buying a new one at higher rates. It’s created what’s known as a lock-in effect.

“They might not be in their ideal house, but they have this great deal on a mortgage right now,” said Andra Ghent, professor of finance at the University of Utah. “We sort of have this mismatch.”

On the show today, Ghent explains how a 30-year fixed-rate mortgage came to be in the United States, why it’s now putting the housing market in a bind, and how our mortgage system perpetuates inequality. Plus, could the Danish mortgage model work here?

Then, we’ll get into why the Federal Trade Commission is eyeing pharmacy benefit managers, the third-party companies that negotiate drug prices between health insurance providers and drugmakers. Plus, the latest economic outlook from Federal Reserve Chair Jerome Powell.

Later, We’ll hear how one listener is pushing back against feelings of hopelessness. And, an editor at The Points Guy shares the story of a travel lesson learned.

Here’s everything we talked about today:

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The team

Marissa Cabrera Senior Producer
Courtney Bergsieker Associate Producer