By Builder
In an attempt to boost affordability, President Donald Trump proposed a 50-year mortgage on Truth Social, and Federal Housing Finance Agency director Bill Pulte confirmed that a 50-year mortgage is a potential weapon in a wide arsenal of solutions that they are developing.
What Could It Mean
The motivation behind the product would be to get younger buyers off the sidelines—and lower monthly payments. Yet, longer terms could mean higher-than-average interest rates and a substantial reduction in the equity homeowners could gain.
Additionally, the potential product will have to navigate legalities set in place from the Dodd-Frank Wall Street Consumer Protect Act, which includes the Qualified Mortgage rule. The rule does not currently include a 40- or 50-year mortgage.
What They’re Saying
Ali Wolf, chief economist at Zonda: “We’re fully supportive of the administration’s efforts to explore solutions that improve housing affordability. There’s a generation of potential homeowners who have been locked out of the market due to rising costs.
While expanding mortgage options like a 50-year loan could help more people qualify, the long-term tradeoffs, such as minimal monthly payment savings, higher expected interest rate on the loans, slower equity building, and extended debt into retirement, mean it may not be the ideal solution. We encourage continued innovation to make homeownership attainable without increasing financial strain over time.”
