I just finished up refinancing my 30 year mortgage, to get the lower interst rates. I went from 6.29% (not too bad in 2003) to 3.75% with a 20 year VA loan. I can assure you that the lenders would PREFER that everyone took out a 15 year loan, rather than a 30 year loan. They turn their money over quicker that way. Also, we were informed that our loan could be (probably WILL be) sold. The mortgage and home loan business has changed immensely in the past 10 years. As you noted, the interest rates aren't going to go much, if any, lower any time soon. If you lose those deductions, what's the point of buying a house? Rent is cheaper, so let the other guy worry about those expenses.