Executive Summary
- A proposal for 50-year mortgages, highlighted by President Donald Trump, aims to lower monthly payments for homebuyers.
- While payments would be lower, the total interest paid on a 50-year loan would be substantially higher than on a traditional 30-year mortgage.
- Real estate experts suggest the policy might help some first-time buyers but argue the core issue is a lack of housing inventory, which requires building more homes.
A proposal for 50-year home mortgages, recently highlighted by President Donald Trump, is sparking discussion among real estate professionals about its potential effects on the housing market. While such a loan could lower monthly payments for homebuyers, experts caution it would also dramatically increase the total amount of interest paid over the life of the loan, raising questions about its overall benefit to borrowers.
The primary appeal of a 50-year mortgage is the reduction in monthly housing expenses. Kristen Ambos, a mortgage lender in the Green Bay area, noted that in the short-term, it could help with affordability. However, the long-term financial implications are significant. Using an example of a $300,000 home with a 20% down payment and a 6% interest rate, a traditional 30-year mortgage would result in a total payment of approximately $650,000. Under the same conditions, a 50-year mortgage would increase the total cost to around $950,000.
“Obviously, for short-term, it does help with the affordability of monthly payments,” Ambos said. “But long-term, it’s really not a benefit to the borrower.”
Despite the higher overall cost, some professionals see a potential upside for certain buyers. Mike Kunesh, President of Place Perfect Realty, suggested that the lower payment could provide a pathway to homeownership for those who might otherwise be priced out. “If you cannot afford that home to begin with, it does give you entry into the market,” Kunesh explained. “And once you’re into the market of owning your own home, it does create an asset and it builds wealth over time.”
Several hurdles would need to be cleared before 50-year mortgages could become a reality, including changes to federal law and ensuring lenders are willing to offer such products. Furthermore, local market dynamics could influence their adoption. Ambos expressed skepticism about widespread acceptance in Northeast Wisconsin, describing homebuyers in the region as generally conservative with borrowing and less inclined to take on longer loans with more interest.
Addressing Core Market Issues
Ultimately, both experts agreed that extending mortgage terms does not address the fundamental challenge in the housing market. They pointed to a lack of available homes as the primary driver of affordability issues. “Inventory is our problem, and we need to create more housing stock and more inventory to ultimately get through this,” Ambos stated, emphasizing that the most effective solution is “actually building affordable homes… from the ground up.”
