Analysts cite inherent flaws of 50-year mortgages

Plan by White House touts affordability, but drawbacks appear to outweigh the benefits.

- BY KEN SWEET

The White House says it is considering backing a 50-year mortgage to help alleviate the home affordability crisis in the country.

But the announcement drew immediate criticism from policymakers, social media and economists, who said a 50-year mortgage would do little to resolve other core problems in the housing market, such as a lack of supply and high interest rates.

Bill Pulte, director of the Federal Housing Finance Agency, said on X last weekend that a 50-year mortgage would be “a complete game changer” for homebuyers.

FHFA is the part of the federal government that oversees Fannie Mae and Freddie Mac, which buy and insure the vast majority of mortgages in the country.

The 30-year mortgage is a uniquely American financial product and the default way to buy a home since the New Deal. Politicians and policymakers at the time wanted to create a standardized mortgage that borrowers could afford and pay off during their working years, when the average lifespan for an American was 66 years old.

Lower payment

Extending the life of a mortgage to 50 years does decrease a borrower's monthly payment.

The average selling price of a home in the U.S. was $415,200 in September, according to the National Assn. of Realtors. Assuming a standard 10% down payment and an average interest rate of 6.17%, the monthly payment on a 30-year mortgage would be $2,288 while the payment on a 50-year mortgage would be $2,022. That’s presuming a bank would not require a higher interest rate on a 50-year mortgage, due to the longer duration of the loan.

Far higher interest