The Trump administration is planning a 50-year mortgage to help younger people afford homes.
"On Saturday, [President Donald] Trump posted on social media a meme introducing the idea of a 50-year mortgage, as President Franklin D. Roosevelt introduced the 30-year mortgage," reported Live Now on Fox on Sunday.
"William Pulte, director of the Federal Housing Finance Agency, reposted the meme saying his agency was 'indeed' working on a 50-year mortgage — calling it a game changer."
Then on Sunday, Pulte posted on X (formerly Twitter) expanding on the proposal: "We hear you. We are laser focused on ensuring the American Dream for YOUNG PEOPLE and that can only happen on the economic level of homebuying. A 50 Year Mortgage is simply a potential weapon in a WIDE arsenal of solutions that we are developing right now. STAY TUNED!"
How could a 50-year fixed mortgage option help young homebuyers?
Some 50-Year Mortgage Pros
- Monthly payments on longer-term loans are typically smaller than those on shorter-term ones. Given the same interest rate, the principal and interest payment on a $350,000 mortgage would be $2,212 on a 30-year loan and $1,973 on a 50-year, yielding nearly $240 in monthly savings.
- Those lower monthly payments mean a home buyer can afford a bigger and better (more costly) home — or stick with the more affordable option.
- The lower payments also mean people can get onto the housing ladder's first rung when they're younger, before reaching peak earning capacity. Currently, the average age of a first-time buyer is 40 years.
- "There are 34% more sellers in the market than buyers," said Redfin in May. More affordable mortgages could help even out supply and demand.
- More home buyers are turning to more affordable (but potentially more risky) adjustable-rate mortgages (ARMs) at the moment. An affordable fixed-rate option might help keep home buyers and mortgage refinancers out of trouble in the future. During the last week of October, the average rate for a 30-year fixed-rate mortgage was 6.31%, compared with 5.56% for a 5/1 ARM, according to the Mortgage Bankers Association.
- "Google searches for 'help with mortgage' recently climbed to their highest level since 2009, while adjustable-rate mortgages, or ARMs, have also been trending," says The Hill. So, there may be demand for something different from today's range of mortgages.
There are plenty of things to like about 50-year mortgages. But stand by for some cons ...
Some 50-Year Mortgage Cons
- 50-year mortgage users would pay more interest. The same $350,000 mortgage example from above would require $446,000 in interest payments for the 30-year options and a staggering $833,000 in interest over 50 years.
- Borrowers are unlikely to get the same mortgage rate on a 50-year loan as on a 30-year one. On Nov. 7, Mortgage News Daily showed the spread (difference) between rates on 30-year loans (6.32%) and 15-year ones (5.82%). Shorter terms typically come with lower rates, so it's very likely a 50-year mortgage would come with rates 0.25-0.50% higher than 30-year rates.
- Life expectancy in the U.S. is currently 78.4 years, according to the CDC. So, anyone signing up for a 50-year mortgage after the age of 28.4 years is statistically likely to die before repaying it in full. That being said, most people don't keep their mortgages for the full term, refinancing or moving long before paying off the original loan. Most 50-year borrowers would refinance into a 30- or 15-year when they became more financially stable.
- Without increasing the supply of homes, additional demand from more buyers might simply push up property prices, potentially negating the cost advantages of a 50-year loan. Heirs would still inherit the deceased's home equity but not the full value of the home.
- Over a 50-year period, many people will have life crises, such as unemployment, chronic sickness or reductions in income, which could increase mortgage default rates. Although such problems may befall those with 30-year loans, the shorter duration reduces the chances, especially among older borrowers.
- If the default rate rises enough, that could destabilize the entire mortgage industry, and possibly the banking sector, too.
Do you think the cons outweigh the pros — or the other way around?
What Do Experts Think?
Economist Tyler Cowen he posted on his Marginal Revolution blog that a 50-year mortgage could raise home prices, slow equity gains, and increase risk to the financial system. He argued that 50-year mortgages could be a good idea for mortgage modifications for struggling existing homeowners, but not for new purchases.
On Sunday, Newsweek rounded up some reactions to Pulte's plans on social media:
- "I don’t like 50-year mortgages as the solution to the housing affordability crisis, wrote Representative Marjorie Taylor Greene (R-GA). "It will ultimately reward the banks, mortgage lenders and homebuilders while people pay far more in interest over time and die before they ever pay off their home. In debt forever, in debt for life!"
- "Young Americans don't want to be debt slaves for the rest of their lives," said Maggie Anders of the Foundation for Economic Education, a conservative libertarian think tank. "We want cheaper houses, which can only be accomplished by increasing the supply through deregulation.
However, Newsweek found that not everyone was so negative. "The 30-year mortgage is one of the best financial products available to Americans. 50 years is even better," said investor John Pompliano.
And cryptocurrency analyst Crypto Wendy wrote, "I don’t think a 50-year mortgage is bad. It gives everyone more flexibility financially. You can pay a mortgage off early. Not sure how else to lower home costs in 2025."
Our View
We have no objection in principle to 50-year mortgages, provided prospective borrowers fully understand the pros and cons.
Someone could make the same argument against a 30-year mortgage versus a 15-year. You pay a lot more interest for the longer loan term. But few can afford a 15-year house loan. Is a 50-year mortgage to this economy what the 30-year was in its day?
Still, it's hard to ignore the inflated total interest payment over the lifetime of the loan (nearly double the interest charge) with the relatively small saving in monthly payments of perhaps $200-$300 monthly on a typical home price.
And a lot depends on a borrower getting the same rate on 50- and 30-year mortgages, which looks unlikely.
This could certainly become a niche loan program -- one of the many available in the market. But most will opt for a good old fashioned 30-year fixed, even if a 50-year is available.
We suspect that, in the long term, the only real solution to the housing crisis is to build sufficient affordable homes to meet demand.
