Want a 2.5% mortgage? Buy it.

Summary

Episode Overview

Podcast: The Indicator from Planet Money
Episode Title: Want a 2.5% mortgage? Buy it.
Date: March 5, 2026
Hosts: Waylon Wong & Stephen Bissaha
Theme:
This episode explores the unique possibility of securing ultra-low mortgage rates—like the coveted 2.5% loans from the early 2020s—even in a high-rate world. The hosts explain how “assumable mortgages” let some buyers take over the seller’s low mortgage rate, discuss why this isn’t more common, and explore the policy debates and practical hurdles around making more mortgages assumable in the future.

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Key Discussion Points & Insights

Nostalgia for Low Mortgage Rates

• Stephen opens with a “time travel” fantasy, wishing to return to 2021 for the low mortgage rates of that era.
• Notable Quote:

  “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%.”
  — Stephen Bissaha (00:55)

What Is an Assumable Mortgage?

• Home buyers can sometimes take over (“assume”) a seller’s old, ultra-low mortgage rate.
• Common with government-backed loans (VA & FHA), but rare in conventional mortgages.
• Notable Quote:

  “Brendan saw in the listing the option to buy the home and get a 2 1/2% mortgage rate.”
  — Stephen Bissaha (03:01)

Real-World Example: Brendan Burroughs’s Story

• In 2024, Brendan Burroughs in Florida finds a home with an assumable 2.5% mortgage.
• Describes a long, frustrating process with the lender, but ultimately succeeds thanks to a large down payment funded by prior investments.
• Notable Quote:

  “We’re just sitting there waiting for a phone call back. Ten days go by, a month goes by, I’m hearing nothing.”
  — Brendan Burroughs (04:38)

Scale of Opportunity

• About 6 million homes (7% of U.S. mortgages) have assumable loans below 5%.
• Sellers must give up their low-rate mortgage; enticing buyers by including this in home listings.

Barriers to Assumable Mortgages

1. Administrative Delays

• Although legally creditors should process assumptions within 45 days, it often drags on for months.
• A cottage industry exists to help buyers navigate the process.
• Advocacy for better enforcement in Congress.

2. Large Down Payments Needed

• Housing prices have soared—original mortgage balances are far lower than today’s prices.
• Buyers must cover the gap, often over $100,000.
• Notable Quote:

  “I had to put down $105,000… that is a lot for a first time home buyer.”
  — Brendan Burroughs (05:21)

3. Need for Cash-Heavy Buyers

• Brendan’s case only worked due to personal stock market gains, a rare situation.
• Not feasible for most first-time buyers.

Policy and Market Implications

• The Trump administration is investigating expanding assumable mortgages for Fannie Mae/Freddie Mac loans.

• Industry experts, like Lori Goodman from the Urban Institute, say that only future mortgages can have new terms—not existing ones.

• Mortgage investors resist because assumptions cut into redeployment of capital at higher rates.

• Quote:

  “You can’t change an existing contract unless both sides agree.”
  — Lori Goodman (06:58)

Potential Downsides

• Expanding assumability might push banks to charge higher rates upfront to compensate for lost future returns.
• Quote:

  “If you made the mortgage assumable… I would probably charge you more for that mortgage at the very beginning.”
  — Lori Goodman (07:45)

• Could mean higher rates on new loans, possible return to double-digit rates if market conditions worsen.

Who Stands to Benefit?

• Assumable mortgages could, in theory, free up much-needed “starter homes.”
• Cash-rich buyers, not typical first-time buyers, usually benefit.
• Quote:

  “We want to free up starter homes… for young families who are the last people that can come up with extra $200,000 in cash.”
  — Lori Goodman (08:30)

• Brendan saves tremendously:

  “My coworker… paid like $3,200 a month. And I said, yo, my mortgage. Literally half that.”
  — Brendan Burroughs (08:56)

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Notable Quotes & Memorable Moments

• “We were just celebrating last week when mortgage rates fell below 6%.”
  — Waylon Wong (01:06)
• “Listing a home with a 2 1/2% mortgage rate, that is a big selling point.”
  — Stephen Bissaha (03:58)
• “Brendan… should probably be hosting this show.”
  — Stephen Bissaha (05:51)
• “Without that low rate, he probably would have spent two more years Zillow surfing at the in-laws.”
  — Stephen Bissaha (09:01)

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Timestamps for Key Segments

• 00:44 – Introduction to the “time travel” mortgage question
• 01:27 – The “not so simple trick” and a preview of the episode
• 02:21 – Enter Brendan’s story and discovery of the assumable mortgage
• 03:15 – Explanation of how assumptions work and relevant loan types
• 04:28 – First Major Barrier: Slow processing and lender delays
• 05:02 – Second Major Barrier: Huge down payments needed
• 06:02 – Brendan’s successful assumption and outcome
• 06:15 – New policy interest under the Trump administration
• 06:37 – Lori Goodman explains why existing mortgages can’t be made assumable
• 07:41 – Why investors (and the market) prefer non-assumable mortgages
• 08:12 – Discussion of who benefits and challenges for ordinary buyers
• 08:56 – Brendan’s monthly payment—“literally half” his coworker’s

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Summary

Assumable mortgages—where buyers can take over the seller’s existing home loan and its rate—hold headline appeal but come with major caveats. The process is complex, slow, and often requires huge sums of cash upfront due to rising home prices. Government and industry leaders are debating whether to broaden assumability but face structural barriers, and any major change could mean higher overall interest rates. For now, the lucky few—like Brendan Burroughs—who can snag an assumable mortgage can save huge, but the tool remains out of reach for most aspiring homeowners.

Transcript

[A]

Npr.

[B]

This is the indicator from Planet Money. I'm Waylon Wong.

[A]

And I'm Stephen Bissaha.

[B]

Stephen, you are back. You've returned from the business desk.

[A]

Yes. Good to be back temporarily, but I plan on making more regular visits. Sorry I've been gone so long.

[B]

We have missed you.

[A]

And I return, Waylon, with a classic question. If you could travel back to any in history, when would it be?

[B]

Oh, well, I need indoor plumbing. That's important. Maybe like the 90s.

[A]

90s. Okay, not too, too far back.

[B]

I'll go back to the 90s.

[A]

Yeah, my time travel visit would actually be even sooner. Just five years back in the past to 2021.

[B]

Oh, you want to go back to the thick of the pandemic? Why?

[C]

Why?

[A]

We're not the thick of it, but, you know, the 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%.

[B]

Yes. A distant memory now. And to put that in context, we were just celebrating last week when mortgage rates fell below 6%.

[A]

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 1/2% mortgage in 2026.

[B]

Okay. But if science fiction has taught us anything, Stephen, it's that going back in time comes with a cost.

[A]

Today on in this show, we reveal the not so simple trick for getting that super low mortgage rate. Something you can do to save a

[B]

lot of money if you have a lot of patience and a lot of cash.

[A]

Can't bring it 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.

[B]

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.

[A]

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.

[D]

I might have my little criteria, had my filter on it, and I had that 400,000, you know, as low as like 300.

[A]

Then he sees the house. Corner lot, four bedrooms, all cinder block to handle those Florida storms.

[D]

I like this. You know, look at this, like, brand. This is nice. Nice. Now, I looked at the description, my eyes lit up.

[A]

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.

[B]

Right. So Steven, 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.

[A]

Yeah. But it turns out there is a way. Whalen, you can sell me your home and, 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 2 1/2% mortgage rate.

[B]

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

[D]

double take, looked at that again. Call Kai real fast. Y' all want this house?

[A]

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.

[B]

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

[A]

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 2 1/2% 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.

[B]

But for as good as transferring a mortgage sounds, few homeowners that have the option actually do it. And that tends to come down to two reasons.

[A]

The first is that this could be a long, drawn out process.

[B]

Yeah, when Brendan Burrows tried to assume the mortgage for that Florida house, he says it was hard to reach the mortgage company.

[D]

We're just sitting there waiting for a phone call back. Ten days go by, a month goes by, I'm hearing nothing.

[A]

The companies that actually manage These mortgages have 45 days by law 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 timeline.

[B]

The other big problem with transferring a mortgage is that home prices have gone up. A lot like 54% since 2020.

[A]

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.

[D]

So basically my gap of I had to put down $105,000, I mean, that

[B]

is a lot for a first time home buyer if that's what you need to have on hand just to seal the deal.

[A]

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.

[D]

And I can't shop during COVID so I had the money sitting there.

[C]

Wow.

[B]

Wait a time at Brendan, he should

[A]

probably be hosting this show instead.

[B]

Oh my goodness.

[A]

So after some waiting and a big down payment, Brendan did it. He was able to get the house and the 2 1/2% mortgage rate.

[B]

Now, back in the present 2026, assumable mortgages are getting a new look, including by the Trump administration. Because maybe making more loans assumable would make more houses affordable.

[A]

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.

[B]

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.

[C]

If Trump waved his magic wand and decreed that Fannie and Freddie mortgages should could be assumable to tomorrow, that he could do that for future mortgages. You just can't do that for those that are outstanding.

[A]

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.

[C]

You can't change an existing contract unless both sides agree.

[A]

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.

[B]

All right, but before we grab the pitchforks, it's worth noting the 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 the 30 year fixed mortgage possible.

[A]

If mortgages became assumable, Lori says interest rates could go up.

[C]

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.

[B]

So that would mean those new transferable mortgages could be at today's 6% rate. And I don't know who would want that.

[A]

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.

[B]

Okay, Steven, let's not manifest that, please.

[A]

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 a 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.

[C]

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 it. Extra $200,000 in cash.

[B]

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 coworker who bought a similar model house.

[D]

He paid like $3,200 a month. And I said, yo, my mortgage. Literally half that.

[A]

Brendan says without that low rate, he probably would have spent two more years Zillow surfing at the in laws.

[B]

This episode was produced by Corey Bridges with engineering by Jimmy Fact checked by Tyler Jones. Kate Concannon is our editor and the indicator is a production of npr.