The American dream feels increasingly out of reach. The average age of first-time home buyers is now 40, and home prices have skyrocketed for years. So President Donald Trump is offering a purported solution: the 50-year mortgage.
Trump’s proposal “could meaningfully reshape a housing market where 30 years is the norm,” said CBS News. The extended term is a “potential weapon” for “ensuring the American dream,” said Federal Housing Finance Agency Director Bill Pulte. Spreading house payments out over a half-century would offer buyers “lower monthly payments” but with the significant downside of a “dramatic increase in the total cost of the loan” thanks to interest payments, said CBS.
What did the commentators say? The idea is “ridiculous,” said Michael Tomasky at The New Republic. Thirty-year mortgages let “typical” homeowners pay off their loans by the time they are in “their mid- to late-sixties.” That, in turn, lets those owners use the rising value of their homes as a “nest egg” for retirement. Extending those payments by 20 years would erase that advantage.
A 50-year mortgage “isn’t the worst idea ever,” said Jonathan Lansner at The Orange County Register. “Few borrowers” hold onto 30-year mortgages for their full terms, either refinancing them or paying them off early. There’s “no reason” to think longer-term loans would behave differently. Savings could amount to a “few hundred bucks” monthly for most buyers.
One downside is that homeowners who sell before paying off their mortgages “will get less of the home’s value” under a 50-year loan, said Allison Schrager at Bloomberg. That seems to be a likely issue, because most owners “only live in their homes for less than 20 years.”
What next? The share of first-time home buyers has dropped to a “record low” of 21% of all home purchases, said The National Association of Realtors. That reflects a housing market “starved for affordable inventory,” said NAR’s Jessica Lautz.
Today’s buyers are “building less housing wealth and will likely have fewer moves over a lifetime as a result,” said Lautz. And right-wing influencers, including Laura Loomer, Mike Cernovich, Christopher Rufo, Sean Davis and Rep. Marjorie Taylor Greene (R-Ga.), “blasted the idea” as “bad politics and bad policy” that could “raise housing costs in the long run,” said Politico. |