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The 30-year mortgage, a product of the Depression

Mortgage paperwork

Many of us take the 30-year mortgage as a plain-vanilla, standard thing. It's the baseline all other mortgages are measured by, after all. But Marketplace asks an interesting question: Who thought 30-year mortgages were a good thing?

The answer: President Franklin D. Roosevelt did. But they may not make as much sense today, the story says:

In the first half of this year, the 30-year fixed-rate mortgage accounted for nearly 90 percent of new mortgages.

"It's a protected species," says Robert Bridges, a professor of economics at USC. "It stands out as a great thing if you can get it."

That is, great for the borrower. The 30-year fixed-rate mortgage, Bridges says, has all sorts of protections -- for one side.

Bridges argues that 30-year mortgages make little sense to banks as investment vehicles, which is why they're largely only making loans they can sell to the government.

Source: Marketplace
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