Last week the Trump team floated the concept of a fifty year mortgage as a means of improving housing affordability.
It is a dubious financial proposal that would bascially turn a new home owner into a “long term renter with a mortgage.” It gives the appearance of building wealth without any substance.
Home ownership is key to longer term personal financial well being. But a twenty year extension of the 30 year standard mortagage means that almost all of the initial decade of payments are for interest only. Little equity is being built.
The average life of an initial home purchase, before moving up or on, is generally under ten years. Equity accumulation would most likely come from a gain in market value on sale versus any paydown on the mortgage loan itself.
Most first time home owners are in their late 20’s or early 30’s. The idea of paying on a mortgage till age 80 would not appear to be a realistic financial plan-unless one hopes to refinance with a shorter term when higher income permits.
In the short term, a 50-year mortgage may appear cheaper. The payment on a 50-year mortgage, for instance, for a $200,000 loan at 6% would be about $1,052, where a 30-year loan would have a payment of $1,199.
However, a long term mortgage is always likely to have a higher rate than a shorter term or an adjustable rate loan.
Finally if for reasons not otherwise obvious at this time, if a 50 year mortgage did increase purchaser’s buying power, it would likely increase demand for homes. When demand goes up, so do prices.
More Creativity Not Impractical Ideas
The 50 year mortgage is not a solution for housing affordability. Rather other creative innovations such asf coop ownership, shared equity or creative financial terms would appear more in the member’s best interest.
Housing affordability is a fertile area for credit unions’ ingenuity. Because they still portfolio mortgages they can invent new financial approaches to home ownership and not merely conform to secondary market requirements.
Chip — I’d like to offer an alternative assessment to the notion that a 50-year mortgage is inherently problematic. When used thoughtfully, a 50-year fixed-rate instrument can be good for consumers for the following reasons:
Inflation Hedge. A fixed-rate mortgage protects against rising interest rates. As inflation accelerates, the real value of your fixed payment declines while the asset typically appreciates faster.
Contractual Flexibility. The borrower retains the call option. You can exit the contract at any time via sale, payoff, or refinance. This optionality provides agility without penalty.
Equity Acceleration. The amortization schedule is not a constraint. Borrowers can make additional payments to build equity faster, effectively shortening the loan term.
Tax Deduction. Mortgage interest is tax-deductible under current law.
I do agree with your supply-demand observation. Expanding affordability through longer amortization may temporarily inflate prices. But over time, market forces tend to normalize, and equilibrium is restored.
Ultimately, for aspiring homeowners, any tool that lowers the barrier to entry deserves consideration. Debt should never be approached casually, but when managed with discipline and foresight, especially on an appreciating asset, it becomes a pathway to building equity.
What if credit unions could design flexible pathways for members to transition from 50-year mortgages to structures that better align institutional risk with member value? Instead of binary choices (1/0, yes/no, true/false, good/bad) solutions could be phased, adaptive, and mutually beneficial.
Good commentary. It would take a pretty alert consumer to take advantage of these options as they arose. Many would just prefer to set and forget, until it comes time to change homes.
Agree that credit unions should be doing some innovative options to help members get into home ownership.
An excellent article from Next City. Gives experience of Japan’s 50 year mortgage results:
https://nextcity.org/urbanist-news/stretching-debt-wont-fix-housing?utm_source=Next+City+Newsletter&utm_campaign=d30baec10e-DailyNL_2025_13&utm_medium=email&utm_term=0_fcee5bf7a0-d30baec10e-44382581
The fact that we are considering 50 year mortgages just reinforces in my mind that we are increasingly a society of renters. Not much different than a recent vendor promoting the concept of residual financing for automobiles! Let’s just talk about payment affordability and forget the impact on the balance sheet? Where is the thrift in that? A 50 year amortization means you get all the expense and responsibility of home ownership with basically having the benefit of a fixed rent payment. Ironically, who stands to gain the most with a 50 year mortgage is the institutional investors who will see an immediate and significant gain to their residential properties portfolio as housing costs rise at an accelerated rate. Get institutional investors out of the residential market and address the significant regulatory and fee burden on new home building. People have short memories. You cannot build an economy on excessive debt…it just doesn’t pencil.