FHFA evaluates portable mortgages amid housing affordability concerns

Bill Bolte, administrator of the Federal Housing finance Agency, said the government agency is “actively evaluating” portable mortgages, which would allow a homeowner to move their loan from their current home to a new home when they move.

With carry mortgages, the homeowner will actually be able to maintain the current interest rate and terms instead of paying off the loan and taking out a new one. It’s a strategy designed to inject movement into a stagnant housing market. Many homeowners and potential buyers have been on the sidelines because they are reluctant to trade mortgage interest rates below 3% for today’s loans that hover around 6.5%.

Jake Krimmel, chief economist at Realtor.com, told FOX Business that these types of mortgages are not compatible with the U.S. mortgage financing structure and would not solve the broader affordability issues facing today’s housing market if they were.

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Krimmel described Bolte’s proposal as a “brutal attempt to solve the ‘lock-in effect.’

When a typical homeowner moves today, they typically have to prepay their existing loan and take out a new loan at prevailing rates. In theory, Krimmel said that if this price gap is the only thing holding back movement, carry mortgages could open up some activity and free up inventory.

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However, Krimmel pointed to a May 2025 Federal Reserve report that revealed how the impact of the lockdown only explains about half of the recent decline in mobility.

When a homeowner moves today, they typically have to prepay their existing loan and take out a new loan at prevailing rates. (Photography: Eric Thayer/Bloomberg via Getty Images/Getty Images)

“It is not clear that portability will return sales to normal levels,” Krimmel said, adding that portability mortgage benefits would also be “very selective.”

With carry mortgages, Krimmel said only existing mortgage holders with low interest rates would benefit, while renters and homeowners without a mortgage would still face today’s rates.

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But feasibility is the bigger issue, he said.

“The U.S. mortgage system is built on securitization, where loans are bundled and priced based on the specific property they back,” Krimmel said. “Mortgages should be tied to the home they originate in, so investors can evaluate collateral risks.”

If the mortgage became transferable, “the collateral (and thus the risk profile of the entire group) would change midway,” which would break the logic of converting mortgages into securities. They would also do away with models used to predict how quickly homeowners will pay off their mortgages and how long those loans will last, both of which are key to valuing mortgage-backed securities.

A “For Sale” sign is displayed outside a home in Los Angeles, California. (Patrick T. Fallon/AFP via Getty Images)

If moving no longer requires buyers to pay their existing mortgage, the term of these loans will “extend sharply and unpredictably,” according to Krimmel. Thus, investors would demand higher compensation for rollover risk, which would push “mortgage rates higher, first abruptly and then structurally through wider spreads on 10-year Treasuries.”

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The issues extend beyond that as well. For example, Krimmel said construction and servicing will become much more complex because lien, warranty, tax and royalty obligations all depend on the specific property.

“Overall, portable mortgages may seem like a good way to mitigate the impact of lock-in – a niche issue unique to current market conditions; but widespread implementation would lead to thorny technical issues and significant unintended consequences – many of which are worse than the issue they are trying to solve,” he said.