Allison Schrager, Columnist

The 30-Year Mortgage Is Saving the US Economy … or Is It?

Long-term fixed-rate home loans help keep the housing market from collapse, but they make the overall economy less dynamic.

June 27, 2023 at 11:00 AM UTC

By Allison Schrager

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”

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Photographer: Dustin Chambers/Bloomberg

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Why is the US housing market not crashing? Interest rates are up, which means more expensive mortgages, which should push down demand. House prices are already falling in other countries, by nearly 9% in Canada and 16% in New Zealand. A map from UBS shows that , worldwide, many urban housing markets are bubble territory.

But in the US, prices have barely budged. The explanation is straightforward if not exactly simple: the 30-year mortgage. It is a financial product that should not exist — and it may well be the only thing keeping the US housing market from collapse right now. 1