Trump Administration Proposes 50-Year Mortgages to Boost Homeownership

The Trump administration is considering the introduction of 50-year mortgage loans as a strategy to improve housing affordability for Americans. Federal Housing Finance Agency Director Bill Pulte confirmed that the administration is actively exploring this option, which aims to make homeownership more accessible amid rising property prices since the pandemic. In a statement on social media platform X, Pulte referred to the proposal as “a complete game changer.”

During an interview on Fox News’ “The Ingraham Angle,” President Donald Trump downplayed the significance of the proposal, asserting that extending the term from 40 to 50 years merely translates to lower monthly payments. He stated, “It’s not like a big factor. It might help a little bit.”

While the administration is enthusiastic about the potential benefits of longer mortgage terms, the details of the proposal remain uncertain. Following Pulte’s announcement, some reports indicated that the White House was caught off guard by the public disclosure. Pulte later clarified that the 50-year mortgage is just one of many options being considered to enhance affordability.

Challenges and Regulatory Hurdles

A significant challenge for the implementation of 50-year mortgages lies in existing regulations established after the 2008 financial crisis. These rules limit most regulated mortgages to a maximum term of 30 years, meaning any change would require Congressional approval. There is bipartisan interest in addressing housing affordability, but opposition exists, particularly among some Republican lawmakers. Rep. Marjorie Taylor Greene (R-Ga.) expressed concerns on X, arguing that such a move would ultimately benefit banks and mortgage lenders while leaving borrowers in long-term debt.

Supporters of the 50-year mortgage plan argue that longer loan terms could decrease monthly payments and broaden the pool of potential homebuyers. However, this assumption hinges on the premise that interest rates for these extended loans would be comparable to those for 30-year mortgages. Analysts suggest this is unlikely, as longer terms typically carry higher risks for lenders, resulting in increased interest rates.

As of last Thursday, the average interest rate for a 30-year mortgage was reported at 6.22%, while 15-year loans averaged 5.5%, according to data from Freddie Mac. If the interest rate for a 50-year mortgage is significantly higher, it could diminish the financial relief that extended terms are meant to provide.

Equity and Affordability Concerns

Longer loan terms could also impede the rate at which homeowners build equity. Borrowers on a 50-year mortgage may find themselves paying nearly double the amount in interest over the life of the loan, extending the timeline for equity accumulation. Keith Munsell, head of the real estate concentration at Boston University’s Questrom School of Business, stated, “It’s a tradeoff among monthly payment, total interest paid and equity build up.” He added that this proposal does not address the primary barrier to homeownership, which remains the down payment.

Reducing the overall cost of homeownership has been a priority for the Trump administration. The president has signed an executive order aimed at identifying ways for the federal government to minimize barriers to homeownership. He has also been pressuring the Federal Reserve to lower benchmark interest rates to enhance mortgage affordability.

Despite mortgage rates nearing historic lows, the housing market remains one of the most unaffordable in U.S. history. According to the National Association of Realtors, the average price of an existing home reached $415,200 in September, while the median sales price for new homes was reported at $413,500 as of August by the National Association of Home Builders.

Both new and existing home prices have continued to rise, even as the market has faced a downturn in recent years. The dramatic increase in home prices can be traced back to the ultra-low interest rates that were available during the pandemic, which stimulated demand and led to inflated costs.

While extending mortgage terms may provide short-term relief for some buyers, it does not tackle the underlying issues driving housing costs. Industry analysts widely agree that the fundamental solution lies in increasing the supply of housing. The rate of home construction has plummeted since the financial crisis and has yet to recover.

Munsell emphasized that addressing the affordability crisis requires more than just altering loan terms. “If you want to make housing more affordable, let’s cut the price of the materials used. Let’s bring in some innovation into the construction industry. Let’s build modular and truck it out to the job site.”

As discussions around housing affordability continue, the effectiveness of the proposed 50-year mortgage remains to be fully evaluated. The focus on long-term solutions will be critical in determining the future landscape of homeownership in the United States.