The Housing Affordability Crisis
Housing affordability continues to be a problem for many areas throughout the United States. Home prices have surged, interest rates have essentially doubled. Meanwhile, home builders haven’t really kept with demand since coming out of the Great Financial Crisis of 2008. In response, the Donald Trump administration, together with the Federal Housing Finance Agency (FHFA) under Director Bill Pulte, has floated a major policy shift: offering fixed-rate mortgages with 50-year terms. See: National Mortgage News
The 50-year mortgage is being pitched as a “game-changer” for affordability, but as with any government-provided solutions, the benefits come with trade-offs. In this post we’ll explore what a 50-year mortgage could mean, who might benefit, the risks involved, and what homebuyers should keep in mind.
What is a 50-Year Mortgage?
In the United States, 15 and 30 year, fixed-rate mortgages have been the standard for residential buyers since the 1950s and 1960s. Creation of such mortgage options lead to a surge in buyer demand and homeownership. The proposed 50-year mortgage is essentially the same thing stretched over a longer period of time. This means lower monthly payments because the payoff is spread out further. On the flipside, it’s a much longer timeframe, equity builds much slower, and a lot more interest is paid over time. See: Truth About Mortgage
As noted by HousingWire: “A longer fixed-rate amortization … would lower monthly payments.” Housing Wire And as one analyst put it:
“Broad, government-backed 50-year mortgages would likely lower monthly payments but raise house prices, slow equity build-up (and raise default risk in downturns)… as a general affordability policy for the U.S., that’s a poor trade-off.” See: Marginal REVOLUTION
Why Now?
Housing affordability isn’t something new, but it’s worse now. Several market forces have converged:
- Home prices have increased dramatically when compared to increases in income. A recent article noted that in California the median home price exceeds $900,000 while median income is only about $90,000. Prices seem to have leveled off in many areas, even dipping some in others. See: HousingWire
- Despite prices stalling, interest rates have skyrocketed since the pandemic. Average rates were under 3% in 2020 before reaching nearly 8% in 2023. Current interest rates are between 6.5% – 7.0%.
- Today, the average first-time home buyer is nearly 40 years old. In the 1980s, the typical first-time home buyer was in their late 20s. Homeownership has been instrumental in keeping a thriving middle class, which drives the overall economic engine for the United States. See: The National Association of REALTORS®
- The idea is that by stretching the term to 50 years, monthly payments drop, improving qualifications and making ownership accessible to more people.
The Trump administration framed the proposal as part of a broad toolkit: portable mortgages, assumable mortgages and extended terms. See: Politico
Potential Benefits
- Lower Monthly Payments: Because you’re paying principal and interest over 50 years instead of just 15 or 30, the monthly payments are lower. For buyers with tight-budgets, this can make the difference between renting and owning.
- Improved Purchasing Power / Qualification: Lower payments means buyers can qualify for more. A larger loan means more purchasing power. This can create new buyers and open up possibilities for existing ones.
- Flexibility: Some buyers might use the 50-year term as a stepping stone: buy now, and refinance later to a shorter term if conditions improve. (Though this depends on interest rates and market conditions.)
Risks & Trade-Offs
While the upside sounds compelling, there are other factors to consider:
- Equity Builds Much Slower: Mortgages are amortized, meaning the interest is front-loaded. Most of the early payments go toward interest. This means homeowners on 50-year terms accumulate equity far slower than if they had only a 30-year mortgage. Not only will their wealth accumulate much slower, there’s less margin for error with something goes wrong (i.e. job loss or health issues during a bad real estate market).
- Higher Total Interest Paid: 20 extra years of payments means more interest over the life of the loan. For example, one model showed total interest could more than double.
- Prolonging Debt Burden / Late Life Risk: Someone taking a 50-year mortgage at age 30 wouldn’t finish paying until age 80, which overlaps retirement years and may pose risks if incomes decline.
- Market Distortions / Supply Side Ignored: In my opinion, the 50-year mortgage simply increases demand without addressing supply constraints. This is common with government policy aimed at making things more affordable. Helping people pay for things with subsidies or providing cheaper payment options often drives up demand. In this case, home prices would likely increase, worsening affordability and offsetting any proposed benefits.
- Risk of Negative Equity or Default: By design, 50-year mortgages pay off much slower, building homeowner equity much slower. This could leave homeowners much more vulnerable to market conditions. If a homeowner needs to sell their house sooner than expected, there is a risk they’ll be upside down.
Bottom Line
The proposed 50-year mortgage is bold (why not 40…or 60). It aims to help U.S. buyers by making payments lower. But it’s not a silver bullet. The trade-offs are significant: slower wealth accumulation, longer debt, higher total interest, and potential systemic risks if scaled broadly. As one analyst noted, “It might be a useful tool … but as a broad policy for new purchases, the trade-offs make it a poor one.” See: Marginal REVOLUTION
For many buyers, the question isn’t just “Can I afford the monthly payment?” but “Do I want to be paying this home off in my 70s, with little equity built, and are the lifetime cost and risk worth it?”
In Conclusion
In the end, the 50-year mortgage could become a niche product or part of a broader strategy. I believe portable mortgages (taking your mortgage from one house to another) or assumable mortgages (allowing the mortgage to transfer from one homeowner to the next) are much more intriguing options. I’d also like to see more supply-side incentives, such as tax breaks for homebuilders who build quality starter homes.
For those considering a 50-year term (if/when available), sit down with your lender and financial advisor and run the numbers for your specific scenario. If you need help finding a quality, local mortgage lender, call me anytime!
Justin Rollheiser – REALTOR®
Keller Williams Realty | Diamond Partners, Inc.
13671 S Mur-Len Rd | Olathe, KS 66062
Mobile 913-800-7653
Office 913-322-5878
Comments or Questions?