Gilkeson raises another issue: "If your client is thinking of moving in the not-too-distant future, why are you not looking at ARMs (Adjustable Rate Mortgages)? People are scared of ARMs, but most ARMs have a long lock-in period now. You can lock in five to seven years."

Indeed, HSH data indicate that if a client were to lock into an ARM that had a rate fixed for seven years and then subject to change annually after that, the rate on July 18 would be 4.91% and .29 points. That is significantly less than the 6.25% jumbo rate that E*Trade charged for its portable mortgage. Gilkeson notes that your client could pocket the savings-just in case rates happen to rise.

However, Bernabe counters that adjustable-rate mortgages offer no options. "A lot of consumers will take a 5/1 ARM (a mortgage that has a rate that is fixed for five years and subject to change annually after that). The problem is after five years, you're going to reprice to market, but there's really not a choice. This lets you lock in to historically low rates and bring them to the next home. If rates go to 8.50%, look at the payment difference. It's over $1,000 on a $500,000 home."

Much has been made of the fact that the United States has no secondary market in portable mortgages, creating an added layer of lender risk for the product. After all, many of the nation's thrifts got squeezed in the 1970s and 1980s due to portfolio mismatches of long-term mortgages at 4% to 5% against double-digit deposit rates.

"Somebody's got to take the lead," says Bernabe, who maintains there has been much interest in creating a secondary market for portable mortgages." We've talked to Fannie Mae, but Fannie Mae won't tell you on the record that they're talking to us." E*Trade sells most of its mortgages to the secondary market.

John Burns, president of John Burns Real Estate Consulting Inc. in Irvine, Calif., says the idea of a portable mortgage in the United States might have originated with him. In the February issue of his regular monthly e-mails to the homebuilding industry, he asked, "Wouldn't it be great if somebody came up with this product?" So many have mortgages at less than 7%, Burns says, that rising rates above that level would be a major enticement for people not to move. E*Trade, Burns says, learned about his remark and ran with its new product.

Portable mortgages already exist in other countries, including Canada, Australia and England. But, at least in Canada, portable mortgages, which became popular in the mid-1980s are quite different from E*Trade's.

BMO Bank of Montreal, explains Gail Kassie, director of that bank's mortgages and home financing products, offers several features with its mortgages at no extra charge, including portability. But Canadian mortgages traditionally have much shorter terms than in the United States. "The most popular term (at BMO Bank of Montreal) is five years," she says.

"People like to go shorter because the shorter rates are usually lower," says Kassie. Say they select a six-month term. They could lock in a rate for six months and then after six months, select another term by signing a renewal agreement. Although mortgage terms can run as long as 25 years, the longer terms are not popular.

Meanwhile, amortization in Canada typically is over longer periods than in the United States. A five-year, fixed-rate mortgage at BMO Bank of Montreal is most commonly amortized over 25 years, she says. This creates lower payments, but means the consumer is not paying off principal as quickly as he or she would if amortized over five years. On July 18, BMO Bank of Montreal had posted rates of 5.85% for a six-month term; 6.20% for a five-year term and 7.80% for a 10-year term. These rates typically are discounted based on factors such as competitiveness and customer relationship, Kassie says. "The average consumer is only paying 5.20%."