The housing market in the U.S. is facing a significant imbalance between supply and demand, exacerbated by a substantial increase in mortgage rates in 2022, which has led to record-low housing affordability. Even high-earning individuals are now forced to rent, and a reluctance to sell homes due to low mortgage rates, known as “golden handcuffs,” is compounding the issue. What can be done to solve the housing problem? Andy Hart, CEO of Delegate Advisors, provided insight into this question in a recent article by Reuters.
According to Hart, increasing the supply of new homes alone won’t solve the problem. Instead, he proposes using mortgage portability, which allows homeowners with low-cost mortgages to transfer them to their next home or attach them as incentives for potential buyers. This would also remove the “golden handcuffs” that currently discourage home sales, save homeowners significant amounts and make homeownership more accessible. Tax implications of porting mortgages also need to be considered, but Hart believes that the benefits for both buyers and sellers are evident.
While mortgage portability is rarely discussed in the U.S., it is not a new concept. It currently exists in countries like Canada, Australia and England. However, it will require an act of Congress to make all outstanding and future mortgages portable here at home. “Congress should take immediate action for homeowners and the economy now,” urges Hart.