Trump proposes a 50-year mortgage to promote affordability
Trump posted an image on social media on Saturday that seemed to suggest he would propose 50-year mortgages, something like that FHFA Director Bill Pulte confirmed this shortly afterwards on X.
The image Trump posted Truth Social shows a head shot of President Franklin Delano Roosevelt under the title 30-year mortgage, and his own head shot under the title 50-year mortgage. Pulte then responded: “Thanks to President Trump, we are indeed working on the 50-year mortgage – a complete game changer.”
As with other official announcements on social posts, not many details have been provided and nothing has been posted on social media White House press page as of this writing.
The president has focused on the issue of housing affordability throughout his term, beginning on Inauguration Day with an executive order for emergency housing price relief. He also applied pressure Federal Reserve Chairman Jerome Powell decided to cut rates and launched investigations against Fed members and tried to fire them in an effort to achieve lower interest rates.
Longer fixed-rate amortization on mortgage loans would lower monthly payments. To use Fannie Mae‘s mortgage calculator With a down payment of 20% and a mortgage interest rate of 6.575%, the overview below shows the payments at different house prices and mortgage conditions. This applies to principal and interest only and does not include property taxes or insurance. The same interest rate is also assumed for a loan with a longer term, which is not self-evident.
$300,000
30 year fixed: $1,529 principal and interest
40 year fixed: $1,418 principal and interest
50 year fixed: $1,366 principal and interest
$400,000
30 year fixed: $2,038 principal and interest
40 year fixed: $1,891 principal and interest
50 year fixed: $1,822 principal and interest
$500,000
30 year fixed: $2,548 principal and interest
40 year fixed: $2,363 principal and interest
50 year fixed: $2,277 principal and interest
While the longer mortgage term lowers monthly payments, it also reduces the amount of equity homeowners build and at some point the savings are minimal – as you see between the 40 and 50 year terms above.
There is also a legal obstacle to a 50-year mortgage. After the great financial crisis, Congress approved the proposal Dodd-Frank Wall Street Consumer Protection Act which made mortgage acceptance stricter. The Qualified Mortgage Rule (QM). is part of that legislation and does not currently allow 40 or 50 year mortgages, so that would need to change for this proposal to gain widespread acceptance. Lenders may offer a 50-year mortgage as a non-QM mortgage, which typically comes with higher mortgage rates to compensate for the risk.
The drop in equity is one reason why HousingWire lead analyst Logan Mohtashami doesn’t like the idea.
“I understand that we face housing affordability challenges in America, but subsidizing more demand from 30- to 50-year mortgages is not the policy we want to pursue right now. Housing needs to balance itself by slowing home price growth and raising wages – as it has for decades. Adding another subsidy to the market only prevents that healing process from happening, which it does.” prevents less equity from being built up. So I am not a fan of any increase in depreciation, the 30-year period.” solved is fine as it is.
“Additionally, a 50-year mortgage is currently illegal under the qualified mortgage law, so that should change as well,” Mohtashami said.
