50-Year Mortgages Are A Trap

With the Trump administration increasingly desperate to create any illusion of prosperity, a new proposal was introduced to create federally-backed 50-year mortgages to make housing “more affordable.” The plan promises lower monthly payments that Trump says would open the door to millions of would-be buyers priced out of the current market. 

But as ultra-long term mortgages pump new money into the system, stretching loan terms will inflate home prices and transform the American dream of homeownership into a lifetime of debt servitude. It’s a Trojan Horse for monetary expansion.

With home prices near record highs and mortgage rates hovering near 6–7%, many households feel permanently locked out of the market. A 50-year term could reduce monthly payments by up to a third, depending on the loan size and interest rate. But the economic implications of lower monthly prices are massive inflation and higher prices in an already-cold economy.

For a $500,000 home financed at 6.3%, the total interest over a standard 30-year mortgage would amount to over $600,000. Extend that same loan to 50 years, and interest payments exceed $1 million, more than doubling the total cost of ownership. Add in property taxes for a home that both the government or the bank can take from you at any time, and it becomes difficult to view the scheme as a path to “ownership” at all.