If you thought 40 years mortgages were nuts…..just wait for what may be coming in 2009. (This great article is from Geld Press.)

Read this post and then tell us what you think….should there be 100 Year Mortgages?

The United States bubble based economy is in trouble.  Instead of focusing on innovating and exporting our way to a stronger economy, we instead choose to borrow more, cut taxes, inflate, and spend.  Our government insists on short sighted solutions to keep asset prices artificially high.

In 1981, the federal fund interest rates topped out at over 19% and mortgage borrowing costs were expensive.  Borrowers were responsible, 20% was the customary home down payment, and the economy was humming along.  But with the first sign of economic trouble, the targeted strategy was to inflate asset prices at any cost, and the preferred solution was lowering interest rates.  Since that time, every new sign of trouble brings lower and lower interest rates, and those rates are now widely expected to hit zero percent in 2009, if not sooner. (Update…now at 0 as of 12/16/08)

Stimulating after zero percent? – Japan had deflating asset problems in the 1990’s Rather than allow the market to naturally self correct, they chose instead to aggressively lower interest rates.  When they approached and  hit zero perecent, they extended mortgage terms to 100 years to dupe consumers. 100 year mortgages were introduced in Japan starting in 1995 obsessed only with monthly payments and no comprehension of true value.  If desperate homebuilders, mortgage lenders, and real estate agents have their way, they will be introduced in the United States starting in 2009.