New 30 Year Treasury Bond May Encourage 40 and 50 Year Mortgages

The AP reports:

The Treasury Department's resumption of 30-year bond sales could have an interesting impact on the home mortgage market, with lenders offering more 40-year loans and maybe even 50-year mortgages for the first time to help some consumers qualify for loans.

While the connection between the two – the U.S. government borrowing money through the sale of debt and a home buyer looking for a loan to buy a home – may not be apparent, the two are inseparable. That's because the interest rate the government pays for its debt usually determines the rate consumers and corporations will pay for the loans they take out.

The reintroduction of the 30-year bond means lenders – who had relied on the government's 10-year note for mortgage rate guidance – have a better idea of what to charge homebuyers for a 40-year mortgage. There is also some talk among lenders, who are always looking for new mortgage products, about creating a 50-year home loan.

As we've said before,give Fannie Mae some time and eventually they'll push for 100 year mortgages.Maybe even with no money down.