The Trump administration has floated the idea of a 50-year mortgage as a way to make homes more affordable at a time of skyrocketing prices, but it has sparked a debate over whether it will solve the affordability crisis or possibly exacerbate it.
Bill Pulte, director of the Federal Housing Finance Agency, said last month that officials were considering backing a 50-year mortgage product, which advocates argue would spread out and
lower monthly payments, making buying a house more affordable.
With extended loan durations, buyers could access more-expensive properties, advocates say, allowing Realtors to market homes as affordable by offering flexible financing options, thereby attracting a larger buyer base.
But critics say there could be unintended consequences, including fueling even higher home prices that could erase the benefit of lower monthly payments and increase borrowing costs.
Nicholas Brownell, branch manager for Total Mortgage Service LLC in Newport, supports more accessible financing for new homeowners.
Affordable payment structures could expedite sales, creating more business opportunities, he said. First-time homebuyers might find this financing option less intimidating compared with traditional loans with higher monthly payments, while investors could benefit from improved cash flow management over a longer period.
“This could be a game changer for affordability,” he said. “Right off the bat, the big win is that lower monthly payment.”
Spread out over 50 years, payments could drop by 20%-30% compared with a 30-year loan, depending on rates and the amount, he said.
“For a young family or first-time buyer scraping by on today’s wages, that extra breathing room means they can actually qualify for a decent home without stretching every paycheck to the breaking point,” Brownell said. “It’s like giving folks permission to build equity without the immediate crush of debt.”
However, Brownell also cautions about potential downsides.
“But on the flip side, you’re locking in more interest over the full haul – potentially double what you’d pay on a shorter term if you ride it out that long. That total cost creeps up because you’re paying slower, so the principal shrinks gradually, and interest piles on,” he said. “But nobody’s forcing you to stick around for half a century. These loans are designed with flexibility to refinance when rates drop. So, it’s not a trap; it’s a tool.
“It democratizes housing in a market that’s priced out so many, especially with rates hovering where they are,” Brownell said.
The current 30-year, fixed-rate mortgage has been a cornerstone of American home financing since its inception in the mid-20th century.
Historically, mortgages averaged 20 years in length, but over the past 50 years, average home prices have skyrocketed from approximately $58,000 to more than $400,000, with housing costs outpacing income growth.
Thomas Fleming, executive vice president of the Rhode Island Mortgage Bankers Association, isn’t convinced that a mortgage product with a longer time frame will offset systemic issues affecting the housing market, noting a nearly three-decadelong shortfall in housing production that’s been exacerbated by strict local zoning laws and stagnant incomes.
“It’s putting lipstick on a pig,” he said. “And you’re in much longer debt.”
The problem is supply, Fleming said.
“You hear this constant battle cry that housing prices are too high and interest rates are too high,” he said. “But then you drive around many of the rural areas in the state, and it’s nothing but woods and open land.
“That’s the crux of the problem. And all these other things may seem admirable on their surface. Let’s make it a little more affordable for a few more people, fine. But you could have a 100-year mortgage in theory.”
Fleming said for a median-priced home of $426,000 with a 15% down payment, a 50-year mortgage could reduce payments by approximately $120 each month.
However, this benefit comes at a cost: total interest over the loan term could expand dramatically, from $448,000 to nearly $918,000. Fleming cautions against the allure of reduced monthly payments.
“You might save a few hundred dollars, but after taxes, insurance and maintenance, the real difference is minimal,” he said.
And extending the repayment term skews more of the early payments toward interest rather than principal, hindering homeowners from building equity.
While longer-term mortgages could enhance buyer purchasing power, without a corresponding increase in housing availability, property prices may continue to escalate, he said.
Fleming warned that any policy designed to improve purchasing power, that is not accompanied by efforts to expand supply will likely exacerbate housing inflation, countering the benefits intended for first-time buyers. This scenario is complicated by data that indicates the average American homeowner stays in their property for less than 12 years, Fleming said.
For 50-year mortgages to gain traction, regulatory changes will be necessary. If government-sponsored enterprises Fannie Mae and Freddie Mac were to endorse these extended terms, the availability of such loans could expand.
Arthur Mead, an economics professor emeritus at the University of Rhode Island, said any discussions about 50-year mortgages must account for broader economic factors, such as income levels and employment stability.
“This is a fix to a short-term problem,” he said, adding that while lowering monthly payments may appear advantageous, it fails to address the foundational issues plaguing the housing market.
While extending loan terms may present short-term benefits, addressing stagnant incomes, supply constraints and comprehensive economic policies is essential for creating sustainable solutions.
A truly systemic change in home financing necessitates a departure from merely adjusting payment structures, as was done largely before the 2008 housing crash, critics said.
“You could say let’s increase funding for education and get people more prepared to enter the market, but that’s not likely to get many votes,” Mead said.
It’s supply and demand. Adding more debt for longer periods is never a good answer. Building more affordable housing is.