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Interest Free Government Home Loans

What one thing could the government do that would create jobs, put money in the peoples pockets, create more home ownership (which is known to solve a multitude of social problems) and make everyone's lives a little happier? And cost very little in the long term?

Interest free government home loans.


Happy Homeowner

Your $200,000.00 home mortgage payment would now be around $550.00 a month.

What would happen tomorrow if the government started offering interest free home loans. Not just for new purchases but all primary home loans. Not just for some special group of people, but for everyone.

Existing home prices would rise.
New home building would rise dramatically.
Rent rates would go down.
Home ownership rates would explode.
Most people would have an extra 20 to 30% spendable cash every month.
People would buy more stuff.
Factories would make more stuff.
Factories would hire more people.
Unemployment rates would fall.
Crime rates would fall.
More people would have a real stake in life and would prosper.
Interest rates on everything else would fall (supply and demand).
The stock market would boom.
All the money that the government loans out is backed up with real estate.

What's the downside? There has to be a downside right?

The FED would lose out on the 300% mark up on interest for money that it creates out of thin air. (good!)
Banks would lose out on their 100% markup on home loans. (loan more money for other stuff)

There would have to be something like a 1% monthly processing handling fee. (small potatoes)

Tell me why this wouldn't work. Or tell me why this hasn't already happened.

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