Can you elaborate on your last sentence a bit more? Just trying to get a more thorough explanation. I just got my first 30 year mortgage so, trying to make myself feel better I guess.
Your interest rate is probably 5% or so?
The real interest rate is probably 3% or so. That means your REAL interest rate is 2%.
When you inevitably get the chance to refinance at below 3% - your REAL interest rate will be negative.
The 30-year fixed mortgage is a product that would not exist without a government guarantee on Fannie & Freddie's debt. Even if you have a jumbo loan - it's only because of the MBS market created by Fannie & Freddie.
In essence, the tax payer is paying you for you to have a mortgage on your house - regardless of whether Fannie securitized your mortgage.
But that's just how mortgages work, right? Lock into a rate, and have that for 30 years? Only in the U. S., AFAICT. Canadians will correct my details, but as one example in Canada one gets a mortgage for, say, five years at x%. After five years, go renegotiate? (Help me out here, Canucks; as soon as I went to write it out, I knew I had it wrong.) Anyway, point is, the "lock it in at 2.5% for 30 years" seems to be unique to the U. S., and assuming that your wages increase, after a period of years you will keep more money in your pocket than the neighbor that rents.