President Donald Trump has proposed a new mortgage product featuring a 50-year term as part of efforts to tackle the growing issue of housing affordability in the United States. This initiative comes as home ownership remains out of reach for many Americans, with experts in Oklahoma weighing the potential benefits and drawbacks of such a long-term mortgage.
According to the National Association of Home Builders and the Wells Fargo Cost of Housing Index, affordability for new and existing homes has reached concerning levels. Data indicates that a family earning the U.S. median income of approximately $104,000 would need to allocate 36% of their earnings to cover the mortgage on a median-priced new home. In stark contrast, families earning 50% of the median income would require a staggering 71% of their income for the same property.
The concept of a 50-year mortgage was championed by Bill Pulte, Director of the Federal Housing Finance Agency, who described it as part of a “wide arsenal of solutions” to address the housing crisis. While the prospect of lower monthly payments is appealing, concerns linger regarding higher interest rates and the slower accumulation of equity over such an extended term.
Historically, longer mortgage options have emerged during economic downturns. The 15-year and 30-year mortgage products were developed during the Great Depression as a response to housing challenges. Prior to that period, mortgages typically had terms of less than 10 years.
In Oklahoma, industry experts were largely unfamiliar with the notion of a 50-year mortgage until it was mentioned by the administration. Kimberly Robbins, President of the Oklahoma City Metropolitan Association of Realtors (OKCMAR), noted that while lower monthly payments could benefit buyers, banks would likely profit more from the extended interest payments typical of longer mortgages. “No one typically does a mortgage longer than 30 years,” Robbins stated. She expressed that while this option may not be the best solution, it could stimulate important discussions about finding effective alternatives.
Local lender LaNell Long of Stride Mortgage believes that there would indeed be demand for a 50-year mortgage if it became available. She sees it as a potential way to enhance affordability for certain buyer demographics. However, she emphasizes the importance of educating buyers about the implications of such a long-term commitment, including the need to consider future refinancing options. “We would really need to assess what their short- and long-term goals are,” Long explained.
Long also suggested that the 50-year mortgage might gain traction in coastal markets with higher living costs, where buyers are already accustomed to larger loan amounts. “I think there would be some traction for those,” she noted, while raising questions about the feasibility of lenders offering such products and the willingness of the secondary market to accept a 50-year note.
As discussions around this proposed mortgage option continue, the implications for home buyers and the housing market as a whole remain to be seen. The administration’s exploration of a 50-year mortgage could open new avenues for addressing the ongoing affordability crisis that many Americans face today.
