David Stevens, president and CEO of the Mortgage Bankers Association, weighed the various consequences of doing away with the 30-year, fixed-rate mortgage in a LinkedIn blog post.

Stevens says borrowers have always preferred the 30-year FRM, but they may have benefited from holding an adjustable-rate product, especially during the past three decades when rates adjusted to lower levels.

The elimination of the 30-year FRM would get rid of the expense and time associated with refinancing a mortgage, Stevens said.

However, this assessment is based on a bygone era when mortgage rates were on the decline. Stevens believes the future will not be anything like the past.

One element that Stevens takes into account is the effect of a spike in interest rates on an adjustable rate for senior citizens who live on fixed incomes. 

He also accounts for heightened risks and the private sector’s role in mortgage finance. As for what a system without a 30-year FRM looks like, Stevens points to the United Kingdom as an example. The result would essentially be a market dominated by 5-year balloon loans and higher downpayments.