I have to admit, I guffawed when I read Robert Broeksmit’s opening line in his response to “The Case Against 30-Year Mortgages,” written by yours truly and published by The Wall Street Journal earlier this month. He “checked the date” to make sure it wasn’t an April Fool’s joke. That’s rich, especially coming from the Mortgage Bankers Association, which took a full two weeks to issue a response. Then again, I suppose that’s right on brand for an industry that measures time in decades of debt.
The MBA’s letter is not so much a rebuttal as it is a confession. It reads like marketing copy for the very product I called out as predatory, deceptive, and systemically distorting: the 30-year fixed-rate mortgage. And it leans, as expected, on the same sentimental platitudes the industry has peddled for decades: stability, homeownership, wealth creation. The problem is that none of those words mean what borrowers think they mean.
Let’s start with “stability.” The only thing the 30-year mortgage does is stabilize balance sheets. It guarantees a predictable, long-term revenue stream for lenders, securitizers, and federal backstops like Fannie Mae and Freddie Mac. Borrowers, meanwhile, pay hundreds of thousands more than the home’s price, and most never reach the end of the amortization rainbow.
Then there’s “affordability.” Mr. Broeksmit says the federal backstop “lowers costs” and “increases liquidity.” That’s true only if you mistake cheap credit for cheap housing. Flooding the market with federally subsidized, long-term debt only makes homes more expensive. Subsidized demand drives prices up, not down. If the MBA were as fluent in economics as it is in public relations, it might recognize that.
And of course, there’s the supposed “truth” in lending, anchored by the Annual Percentage Rate (APR), a number and cost metric so disingenuous and misleading it deserves its own section in the advertising code. APR is not a measure of cost; it’s a measure of illusion. It flattens a lifetime of interest payments into a digestible rate designed to soothe borrowers, not inform them. No family shopping for a $400,000 home with a 6% mortgage is told, “Congratulations! You’ll be paying $690,000 for that house.” Instead, they’re told, “Your rate is 5.97%, and that’s lower than your credit card.” APR isn’t transparency: it’s marketing.
What’s most telling about the MBA’s letter is what’s missing: any actual argument. No data. No discussion of total loan cost, price inflation, or the market distortions that come from tying $13 trillion of household debt to a single, government-engineered product. Just a gauzy defense of “the American Dream,” delivered by the people who’ve been monetizing it for the last century.
So no, Mr. Broeksmit, this isn’t an April Fool’s joke. But you’re right about one thing: the real joke is on millions of Americans who’ve been told that lifetime debt is a path to prosperity. It’s on the young families paying twice for the same home. It’s on the taxpayers’ underwriting “stability” for an industry that couldn’t exist without federal guarantees.
The 30-year mortgage isn’t the bridge to homeownership: it’s the toll road. And the Mortgage Bankers Association has been collecting for over one hundred years.