In recent remarks, former President Donald Trump mentioned the idea of introducing 50 year mortgages, a concept that instantly sparked curiosity and debate across the real estate world. While it sounds like a bold plan to make homeownership more affordable by lowering monthly payments, the long term implications might not be as bright as they appear.
Let’s break it down.
The Idea Behind a 50 Year Mortgage
The basic idea is simple. Stretch the loan term from 30 years to 50 years and your monthly payment drops. A longer loan term spreads the debt out over more time, which could make it easier for buyers to qualify and afford homes, especially in high cost markets.
For first time buyers who feel priced out, this could sound like a dream come true.
But as with most things in finance, the details matter.
The Catch: Interest Adds Up Big Time
While a 50 year mortgage would lower the monthly payment, it would also massively increase the total interest paid over the life of the loan.
For example:
-
A $400,000 loan at 6.5% interest for 30 years would cost about $910,000 total.
-
The same loan stretched to 50 years would end up costing roughly $1.4 million.
That’s almost half a million dollars more in interest.
So while your monthly payment might feel manageable, you would be paying the bank much more over time.
Slower Equity Growth
Another downside is slower equity growth. The first 10 to 15 years of a long mortgage are mostly interest payments, so homeowners would own very little of their home for a much longer period. That could make it harder to sell, refinance, or tap into home equity if the market changes.
The Market Impact
If 50 year loans became common, they could temporarily increase housing demand, especially among younger buyers and investors looking for lower payments. But that new demand might also push home prices higher, canceling out some of the affordability benefits.
It could also extend the lifespan of debt in the economy, tying consumers to lenders longer and creating more financial vulnerability during downturns.
Could It Actually Happen
The idea is not completely new. Japan and the United Kingdom have experimented with ultra long term mortgages before. In some cases, the loans can even be passed down to heirs. But for the United States, this would be a major shift in mortgage structure, requiring backing from Fannie Mae, Freddie Mac, or private lenders before it could become mainstream.
The Bottom Line
A 50 year mortgage might sound like a way to make housing more affordable, but it is really a trade off between short term relief and long term cost. It could open doors for some buyers, but those doors come with decades of extra interest and slower equity growth.
For now, it is just an idea being discussed, but it is definitely one to keep an eye on as housing affordability remains a key national issue.
