American Notes Mortgages

As a clan, young, affluent professionals are partial to particular brands of sneakers (Reebok) and cars (Saab). Recently the group discovered its own mortgage. The 15-year, fixed-rate home loan is favored by married couples in their 30s and 40s who together earn $60,000 or more. Virtually unknown a year ago, this new form of financing now accounts for more than 14% of all loans made by America's largest mortgage bankers.

Lenders like their new concoction because the loans extend for just half the term of the traditional 30-year mortgage. That means there is less risk that a borrower will default or interest rates will suddenly rise. Home buyers are enticed by the loan's interest rate, which is usually between one-half and five-eighths of a percentage point less than that on a 30-year mortgage. The current rate on a 15-year loan: 11.6%. Borrowers also are pleased that their interest payments by the end of the loan are less than half those of a 30-year mortgage holder. Finally, many young homeowners are simply skittish about taking on debt. Neil and Sue Younkin seven months ago took out a 15-year mortgage to buy their house in Brookfield, Ill. Says Sue, 25, sounding as risk-averse as any survivor of the Great Depression: "I don't like being in debt. The sooner you own free and clear, the better."