Economists are warning that President Donald Trump’s proposed plan to ease mortgage costs could saddle millions of Americans with longer-term debt, a short-term relief that may carry a lifetime price tag.
Over the weekend, Trump floated the idea of a 50-year mortgage in a Truth Social post. Bill Pulte, the director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, confirmed in a separate post that the administration was “indeed working on” the new mortgage option and called it “a complete game changer.”
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And while Trump has pitched the idea as a way to make homeownership more attainable, experts say it addresses only the symptom, not the cause, of America’s housing crisis.
“While it might be a helpful product for some consumers, it will make housing even more unaffordable by further pumping up demand,” explained Bryan Caplan, a professor of economics at George Mason University.
“If we don’t build more houses, they will stay expensive,” Caplan told Fox News Digital.
Joseph Gyourko, professor of real estate and finance at Wharton Business School at the University of Pennsylvania, agreed that the real issue lies on the supply side.
“The problem is the lack of supply and the lack of supply is due to regulation, which is a way of saying it’s just easy to stop development in the United States,” said Gyourko.
“The longer-run problem is the lack of new building of homes.”
E.J. Antoni, chief economist at the Heritage Foundation, agreed, arguing that the lasting solution is to expand housing supply rather than create new forms of financing.
“President Trump should be commended for trying to address the home affordability crisis created under his predecessor,” Antoni said. “But the problem does not stem from a lack of long-term financing options. Instead, it’s a fundamental mismatch between supply and demand.”
TRUMP’S 50-YEAR MORTGAGE PROPOSAL: WHAT WOULD IT MEAN FOR HOMEBUYERS?
Antoni argued that the only way to bring prices down is to make it easier and cheaper to build.
“The best way to thaw this frozen housing market,” he said, is to reduce government spending to relieve pressure on interest rates and roll back burdensome regulations so more homes can be built.
Yet even with greater housing supply, experts say extended loan terms could burden buyers with significantly higher lifetime costs.
Joel Berner, senior economist at Realtor.com, said potential “savings” from a 50-year mortgage could be wiped out by rising home prices.
“The drawbacks are that a 50-year mortgage results in almost double the interest payments of a 30-year mortgage and a longer path to meaningful home equity, and that the result of subsidizing home demand without increasing home supply could be an increase to home prices that negates the potential savings,” Berner said.
He broke it down with a simple example. If you borrowed the same amount of money at the same 6.25% interest rate, a 50-year mortgage would end up costing nearly twice as much in interest as a 30-year one, roughly $816,000 instead of $438,000.
That’s because stretching payments over a longer time means you’re paying interest for 20 extra years, even though the monthly payments might look smaller. In the long run, you’d end up spending far more to own the same home.
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