The Homeownership Alliance is expected to release an upbeat history of fixed-rate mortgages today that finds their proliferation has increased homeownership and benefited consumers.
Though that is hardly a surprising conclusion, the report is being published as Washington debates how to reform the U.S. housing finance system and Europe debates whether to copy it.
The alliance is made up of U.S. trade groups, nonprofits, and companies involved in housing, including the Independent Community Bankers of America, the National Association of Home Builders, the National Association of Mortgage Brokers, the National Association of Realtors, Fannie Mae, and Freddie Mac.
The report, written by Stuart A. Gabriel, the director of the University of Southern California's Lusk Center for Real Estate in Los Angelescolor>, breaks little ground. But it lays out succinctly the mortgage market's evolution since the 1930s, when government insurance made fixed-rate, long-term, self-amortizing mortgages without prepayment penalties palatable to banks.
Today such loans dominate the market. Last week 27.5% of all mortgage applications were for adjustable-rate loans, the Mortgage Bankers Association reported Wednesday. That was the highest such percentage in the United States in three and a half years but lower than in most countries.
On Monday five European banks proposed creating a mortgage finance agency to help them offer 25- or 30-year fixed-rate mortgages without prepayment penalties. To lower the proposed agency's borrowing costs, the banks are seeking an implicit guarantee from the European Union.