Maybe Alan Greenspan Was Right About Floating-Rate Mortgages
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.