Munich Personal RePEc Archive

Obsolescence Of The 30-Year Mortgage

Gulino, Salvatore (2012): Obsolescence Of The 30-Year Mortgage.

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This paper examines the relationship between the microeconomics of real-estate and the negative impact of the innate flaws of the 30 year mortgage as it relates to elevated Housing Cost To Income Ratio averages (HCTI). The average borrowers housing expense has risen to approximately 50% of an American’s average net income. As a consequence of this dilemma, it is not uncommon that homeowners find themselves financially ill-equipped to handle moderate downturns in the economy. Our research suggests that by having a thorough understanding of how these intricate components work together, allow for a more enhanced comprehension of the past, present, and future of our financial system. Furthermore, we explore how the proper management of the Nation's HCTI averages can be used to help avoid economic recessions.

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