The 40-Year Mortgage: An Idea Whose Time Has Not Come

SAN ANTONIO – It will probably be some time before a 40-year mortgage, being piloted by some credit unions, is more accepted in the marketplace, according to one mortgage market expert.While some credit unions may be exploring the longer maturing home loans as an alternative to refinancing, there is not enough data in the market to determine the efficacy of the 40-year loans, said Amy Crews Cutts, a senuor economist for Freddie Mac, during CUNA’s Lending Council conference.“They’re not priced very well and there isn’t much volume, and there’s not enough volume because it’s not priced very well,” said the housing economist during a session on the effects of the subprime crisis on the mortgage market. “And until we get enough of them it’s not a viable product.”Two dozen credit unions have been piloting a 40-year mortgage for the past two years but the meltdown in the mortgage market has stymied the development of the product, as members move to more traditional home loans, like the 30-year, fixed-rate mortgage.