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Are "Long Am" Mortgages Inflationary?

40-year-mortgages40-50% of borrowers in the past year chose mortgages with 30 to 40-year amortizations, according to a report penned by CIBC Economist Benjamin Tal.

Despite the extra buying power afforded by these mortgages, Tal thinks the majority of these buyers would have purchased the same house even if 30 to 40-year mortgages didn’t exist. 

Tal therefore “suspects” that long-term amortizations are not inflationary since they do not “represent additional demand.”

In the report, Tal also encourages regulators to look kindly on “mortgage innovation,” which includes, among other things, specialized mortgages for the self-employed.  The self-employed workforce, he says, grew 7.5% in the past year, six times faster than regular employees.