How Assumable and Portable Mortgages Could Reshape Housing in Orange County and Long Beach

The conversation around housing affordability in Southern California has expanded far beyond basic interest rate updates. In recent months, policy discussions at both the state and federal level have shifted toward ideas that could significantly change how buyers and sellers navigate real estate in markets such as Orange County and Long Beach. Two of the most important topics are the expansion of assumable mortgages and the potential introduction of portable mortgages. Both concepts aim to address the affordability challenges created by years of elevated mortgage rates and limited housing supply.

Why Assumable Mortgages Matter in Today’s Market

Assumable mortgages are loans that can be transferred from the current homeowner to the buyer. The most important feature is that the buyer inherits the seller’s existing interest rate. If a seller locked in a three percent mortgage before rates increased, an assumable loan allows the buyer to take over that rate rather than applying for a new loan at the current rate.

Today, only certain loan programs allow assumption, mainly FHA and VA loans. However, the California Association of Realtors has expressed support for expanding this option to include more conventional loans backed by Fannie Mae and Freddie Mac. This is significant because most homeowners in Orange County and Long Beach currently hold conventional fixed rate mortgages.

Expanding assumable mortgages could:

• Increase affordability in high priced areas

• Allow buyers to secure far lower payments than current market rates allow

• Create stronger demand for homes with attractive rates

• Help sellers in competitive markets stand out

This is an especially important conversation in Orange County and Long Beach, where home prices are higher than the national average and the gap between older low rate mortgages and current higher rate mortgages is extremely large.

How Portable Mortgages Fit Into the Picture

Portable mortgages are a separate concept being reviewed at the federal level. A portable mortgage would allow a homeowner to transfer their current loan to a new property when they move. Instead of securing a new loan with a new interest rate, the homeowner keeps the same rate and remaining loan balance.

This idea is being considered because millions of homeowners have very low rates, often below four percent, and many are choosing not to move because they do not want to replace their mortgage with a much higher rate. This situation has contributed to low inventory across the country.

If homeowners were allowed to take their rate with them, it could:

• Encourage more movement among existing homeowners

• Add much needed supply to the market

• Help families relocate without a significant financial penalty

• Open more options for growing households in cities such as Irvine, Costa Mesa, Huntington Beach, Fountain Valley, Long Beach, and Lakewood

While promising, portable mortgages would require major regulatory and logistical changes, since mortgages are tied to specific properties. This is why federal agencies are still evaluating how such a system could work.

Why These Ideas Are Important for Orange County and Long Beach

Orange County and Long Beach have experienced some of the sharpest affordability challenges in the state. High home prices, limited supply, and years of low mortgage rates have created a locked in effect. Many homeowners want to move, but the idea of replacing a three percent loan with a six or seven percent loan is financially unrealistic.

Both assumable and portable mortgages target the root of this problem. Orange County and Long Beach have large numbers of homeowners with older low rate mortgages and a high demand from buyers who would benefit from assuming those loans. If either of these policy changes moves forward, these regions could see:

• Increased supply

• More mobility for current homeowners

• Lower payment options for buyers

• More balanced market conditions

Even if the long term impact is limited, the short term benefits could be meaningful for both buyers and sellers who have been stuck on the sidelines.

Balancing Opportunity and Complexity

While these ideas could provide relief, both also raise concerns. Portable mortgages would require reworking how mortgage backed securities function. Assumable mortgages for conventional loans would require updates to long standing loan policies and servicing standards. Policymakers are studying these issues to understand the full implications.

For now, the most important takeaway is that the real estate landscape is shifting. Expanding access to assumable mortgages and evaluating portable mortgage solutions signals a growing interest in improving affordability and mobility in markets where many homeowners feel stuck.