More than 70 percent of those surveyed believe that the creative loans might be a solution for some borrowers but risky for others. The association warns buyers to make sure they understand all of the terms and conditions of a loan before signing any documents. More than 80 percent of brokers who responded expect rates to continue increasing. Nima Nattagh, an analyst who does research for the mortgage industry, notes that variable-rate products are a popular option when rates are low. But long-term and short-term rates are getting closer together. “As rates go up, I think the consumers are going to find fixed-rate mortgages a lot more attractive at the expense of variable rate,” he said. Robert Kleinhenz, deputy chief economist at the California Association of Realtors, said not every lender offers a 40-year mortgage. But the time frame should not matter because loans on average are turned over every five to seven years as homeowners move or refinance. “It certainly is another avenue lenders can go down to enable households to be able to afford homes at the kind of prices we’ve been seeing in the last few years,” Kleinhenz said of the 40-year mortgage. Gregory J. Wilcox, (818) 713-3743 [email protected] 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MORERose Parade grand marshal Rita Moreno talks New Year’s Day outfit and ‘West Side Story’ remake But a moderate increase in rates should not be worrisome, association members said. A survey of association members found that 60 percent believe 40-year fixed-rate loans will become more economical for homebuyers next year. A loan of this duration will generally lower the monthly payment by several hundred dollars, depending on the home price, said Marcell, who is also president of Better Mortgage Brokers Inc. in Upland. “It’s just another way for people to try to get a home in today’s economy (because) in California it’s extremely difficult.” Also in the forecast: Other popular mortgage products will include reverse mortgages, 100 percent financing and adjustable loans, with low starting rates or beginning interest rates from which fluctuation can occur. With little improvement expected next year in housing affordability, mortgage bankers are predicting a surge in 40-year mortgages, which are becoming increasingly popular because of their lower monthly payments. The California Association of Mortgage Brokers, in an annual forecast released Monday, also expects the interest rates to hit 7 percent in 2006. Affordability will continue to be a critical issue for the state, even though prices are expected to stabilize. “It is alarming that the housing affordability crisis will continue, making it difficult for first-time buyers to qualify for adequate financing,” said the association president, John Marcell.