Fact Check Team: Will Trump’s 50-year mortgage idea solve or worsen housing affordability?

With housing affordability reaching crisis levels across the United States, former President Donald Trump has proposed a new solution: 50-year mortgages. The proposal has ignited debate among economists, housing experts, and potential homebuyers about whether extending mortgage terms would help Americans achieve homeownership or simply mask deeper affordability issues.

Trump unveiled the mortgage plan during recent campaign stops, suggesting that longer loan terms would reduce monthly payments and make homeownership more accessible. “We’re going to do something else—50-year mortgages at a very low interest rate,” Trump stated at a rally in Michigan last month.

The U.S. housing market currently faces unprecedented challenges. The median home price has surged to $416,100, according to the National Association of Realtors, while mortgage interest rates hover near 7 percent—their highest level in over two decades. This combination has pushed monthly payments beyond reach for many first-time buyers.

Under the traditional 30-year mortgage model, a $400,000 home with 20% down and a 7% interest rate results in monthly payments of approximately $2,129. A 50-year mortgage at the same rate would reduce that payment to around $1,925—a savings of about $200 per month.

“While the monthly payment reduction seems attractive at first glance, the long-term financial implications are concerning,” explains Dr. Lawrence Yun, chief economist at the National Association of Realtors. “Homeowners would build equity at an extremely slow rate, potentially remaining underwater on their mortgages for decades.”

Financial experts point out that 50-year mortgages would dramatically increase the total interest paid over the life of the loan. For that same $400,000 home, a borrower would pay approximately $767,000 in interest over 50 years, compared to $453,000 over 30 years—an additional $314,000 in interest costs.

The concept isn’t entirely novel. Countries like Japan have experimented with multi-generational mortgages, with mixed results. In the United Kingdom, 40-year mortgages have gained some traction, representing about 37% of new home loans according to UK Finance.

Housing policy specialists question whether the proposal addresses the root causes of the affordability crisis. “The fundamental problem isn’t mortgage structure but the severe supply shortage combined with high construction costs,” says Jenny Schuetz, senior fellow at the Brookings Institution’s Metropolitan Policy Program. “Extending mortgage terms doesn’t create more housing units or reduce the cost to build them.”

The proposal would also require significant regulatory changes. Fannie Mae and Freddie Mac, the government-sponsored enterprises that back most U.S. mortgages, currently don’t purchase loans with terms beyond 30 years. Any expansion would require approval from the Federal Housing Finance Agency.

Some economists worry that 50-year mortgages could actually worsen affordability by enabling buyers to bid more for homes, potentially driving prices even higher in supply-constrained markets. “There’s a real risk that easier financing terms just get capitalized into higher home prices,” notes Mark Zandi, chief economist at Moody’s Analytics.

The mortgage banking industry has responded cautiously to the proposal. The Mortgage Bankers Association acknowledges the need for innovation in home financing but emphasizes that any new products must balance accessibility with consumer protection and financial stability.

First-time homebuyers like Jennifer Carpenter from Atlanta represent those caught in today’s housing squeeze. “I make a decent salary but can’t afford homes in my area. I’d consider a longer mortgage if it meant getting my foot in the door, but I worry about being in debt until I’m in my 80s,” she says.

Housing affordability solutions remain politically divisive. The Biden administration has focused on increasing housing supply through zoning reform incentives and financing for affordable housing construction. Congressional proposals range from first-time homebuyer tax credits to investment in manufactured housing.

As the 2024 presidential campaign advances, housing affordability promises to remain a key economic issue, with candidates offering competing visions for addressing one of the most pressing financial challenges facing American families.