The Indicator from Planet Money - Want a 2.5% mortgage? Buy it.

Episode Date: March 5, 2026

Remember those juicy mortgage rates from back in 2021? You don’t actually need a time machine to get one today. You just need to find someone willing to sell their house AND their mortgage to you. Called ‘assumable mortgages,’ they take a long time to get, and you’ll probably need a fat wad of cash.On today’s show, how to buy your way into a cheap mortgage rate.Related episodes: How mortgage rates get madeHow mortgage interest rates work (and why they're currently out of whack)For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org. Fact-checking by Tyler Jones. Music by Drop Electric. Find us: TikTok, Instagram, Facebook, Newsletter.See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

NPR. This is the indicator from Planet Money. I'm Waylon Wong. And I'm Stephen Bissaha. Steven, you are back. You've returned from the business desk. Yes, good to be back temporarily, but I plan on making more regular visits. Sorry I've been gone so long.

We have missed you. And I return, Waylon, with a classic question. If you could travel back to any time in history, when would it be? Oh, well, I need indoor plumbing. That's important. Maybe like the 90s. 90s, okay, not too too far back. I'll go back to the 90s.

Yeah, my time travel visit would actually be even sooner, just five years back in the past to 2021. Oh, you want to go back to the thick of the pandemic? Why? Why? Not the thick of it, but you know, one reason I want to go back is so I could get a mortgage. Mortgage rates at the time were crazy low, like less than 3%.

Yes, a distant memory now. And to put that in context, we were just celebrating last week when mortgage rates fell below 6%. Lucky for us, there is a way to travel back to 2021 and drag those low mortgage rates into the present. Yes, you can get a 2.5% mortgage in 2026. Okay, but if science fiction has taught us anything, Stephen, it's that going back in time comes with a cost. Today on the show, we reveal the not so simple trick for getting that super low mortgage rate, something you can do to save a lot of money. If you have a lot of patience and a lot of cash.

Can't bring you back to the 90s, though. I'm sorry, put the Rugrats away. So we're going to start our time travel journey easy. Just going back a couple years to 2024. And in 2024, the housing market didn't look all that different from today. I mean, if anything, the market's even worse. mortgage rates are a little bit higher, and same with the sales price of a typical home. And that is why instead of being a homeowner, Brennan Burroughs is living in Florida with the in-laws

and, you know, doing some classic zillow surfing. And I had my little criteria, I had my filter on it, and they had that $400,000, you know, as low as like $300. Then he sees the house, corner lot, four bedrooms, all cinderblock to handle those Florida storms. I like this, you know, look at pictures. This is like, Brian, this is nice, nice. Now, I looked at the description, my eyes lit up. They lit up because in that description was the secret to our time travel. And the way to get those cheap, cheap mortgage rates.

And it's different from how selling a home normally works. Right. So, Stephen, if I sold you my home, I normally would have to pay off my mortgage in full. And then start over with a new mortgage at today's probably higher rates for my next home. Yeah, but it turns out there's a way, Wayland, you can sell me your home and give me your old mortgage rate too. That is what Brendan saw in the listing, the option to buy the home and get a two and a half percent mortgage rate. This is called an assumable mortgage. Brendan says his real estate agent Kai had told him about assumable mortgages, so he knew what to look for. So then when he saw one for the house he wanted, he did a double take.

Looked at that again. Call Kai real fast as you all want this house. Basically every government-backed mortgage is assumable. So we're talking Department of Veteran Affairs loans. so lots of vets have this option. And new home buyers, without a lot of cash, they often get loans from the Federal Housing Administration, and those are also assumable.

About 6 million homes have an assumable mortgage below 5%, according to an estimate from the company Assume List. So that's about 7% of all outstanding mortgages in the U.S. And yes, the home seller still has to give up their low mortgage rate and get a higher one if they're buying another house. But, you know, listing a home with a two and a half percent mortgage rate, that is a big selling point. Like, Waylon, if I was able to buy your house and get that rate, I might be more willing to, you know, pay a little more since I'd still be saving money. But for as good as transferring a mortgage sounds, a few homeowners that have the option actually do it.

And that tends to come down to two reasons. The first is that this could be a long, drawn-out process. Yeah, when Brendan Burroughs tried to assume the mortgage for that Florida house, he says it was hard to reach the mortgage company. We're just sitting there waiting for a phone call bag. Ten days go by, a month goes by. I'm hearing nothing. The companies that actually manage these mortgages have 45 days bylaw

to finish a credit review for the transfer or just finish up the whole process. In reality, it can often take months. In fact, there are companies that their whole deal is helping buyers navigate this, and they want Congress to better enforce that time. The other big problem with transferring a mortgage is that home prices have gone up a lot, like 54% since 2020. So of course, the original mortgage made when housing was cheaper is no longer going to cover the price of the same house today. It's up to the buyer to make up the difference, and that could be a huge down payment. So basically, my gap of I had to put down $105,000.

I mean, that is a lot for a first-time home buyer, if that's what you need to have on hand just to seal the deal. Like, frankly, this is the biggest barrier for assuming a mortgage. Now, Brendan, he was lucky. He made some smart investments years earlier in two little companies, Tesla and Nvidia. And I can't shop drunk over it. So I had the money sitting there. Wow. Way to time, I met Brendan.

He should probably be hosting this show instead of, you know. So, after some waiting and a big down payment, Brendan did it. he was able to get the house and the two and a half percent mortgage rate. Now, back in the present, 26, assumable mortgages are getting a new look, including by the Trump administration, because maybe making more loans, assumable, would make more houses affordable.

Yeah, the federal housing finance agency director, Bill Pulte, posted about this on X in November. He wrote that Fannie Mae and Freddie Mac were evaluating how to do assumable mortgages in a safe and sound manner. It's still really vague about what that would, actually look like or mean. So to understand what could happen, we called up Lori Goodman. She's written about assumable mortgages for the Urban Institute. If Trump waved his magic wand and decreed that Fannie and Freddie mortgages should,

could be assumable tomorrow, bet he could do that for future mortgages. You just can't do that for those that are outstanding. Meaning, yes, Trump can make these new mortgages transferable. He can't do that, though, for ones that already exist, because basically mortgages are contracts. You can't change an existing contract unless both sides agree. And the bank or investors that own your mortgage are not likely to agree. Essentially, these groups expect a certain number of mortgages to end early because, you know, people move. So they get their money back and can reinvest it into buying new mortgages at today's higher rates. And bam, they're now making more money than if they let you transfer your old mortgage.

All right, but before we grab the pitchforks, it's worth noting, this system, and the secondary mortgage market where these different investment groups buy-up mortgages does put a lot more money in the housing market and it helps keep interest rates down. You could argue it's what makes a 30-year fixed mortgage possible. If mortgages became assumable, Lori says interest rates could go up.

If you made the mortgage assumable so that I was no longer able to do that, I would probably charge you more for that mortgage at going in at the very beginning I might charge. So that would mean those new transferable mortgages could be at today's 6% rate. And I don't know who would want that. I don't know. Rates might go like the 80s at some point and go into double digits someday.

Then you will be wishing for a 6% mortgage. Okay, Stephen, let's not manifest that, please. I'm trying not to will it or anything like that. But, you know, Lori did look at all these hurdles you mentioned earlier, like how difficult it is to transfer mortgage and how much cash you need and says, This is your solution of getting people into their first home? Yeah, good luck with that. The idea is we want to free up starter homes that people have lived in too long. They've had the extra kid.

And we want to free that up for young families. Who are the last people that can come up with an extra $200,000 in cash? But if you can make an assumable mortgage work like Brendan Burroughs did, then you've got something to brag about. He says he's saving a lot of money on his home, especially compared to his co-worker who bought a similar model house. He paid like $3,200 a month. And I said, yo, my mortgage literally half that.

Brendan says, without that low rate, he probably would have spent two more years zillow surfing at the in-laws. This episode was produced by Corey Bridges with engineering by Jimmy Keely. It was fact-checked by Tyler Jones. Kate Kincanon is our editor and The Indicator is a production of NPR.