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May 27 2015 by riskspan in Media - Press

RiskSpan’s Leader on Residential Mortgage Risk, Kathy Kelbaugh, Weighs in on Mortgage Rates in an Article for Bloomberg Business

Maybe Alan Greenspan Was Right About Floating-Rate Mortgages

 

Vindication?

Back in 2004, Alan Greenspan suggested Americans might benefit from taking out more floating-rate home loans.

More than a decade after the former Federal Reserve chairman touted adjustable-rate mortgages, James McAndrews, the New York Fed’s director of research, has suggested that the U.S. may indeed have been better off with more floating-rate home loans. And just like Greenspan’s comments, the latest remarks come just as the U.S. central bank is preparing interest-rate increases that would ostensibly make it more expensive for borrowers with such debt.

Greenspan’s advice seemed particularly ill-timed.