Nov. 10 (UPI) — The Trump administration is working on a plan to introduce a 50-year fixed-rate mortgage with the goal of making homeownership more affordable for millions of Americans, as some analysts warn of hidden costs.
Federal Housing Finance Agency Director Bill Pulte confirmed the report, saying the proposed 50-year loan would lower monthly payments to bring more buyers into the housing market.
“Thanks to President Trump, we are indeed working on The 50-year Mortgage — a complete game changer,” Pulte wrote Saturday in a post on X. Trump has compared the plan to the 30-year mortgage from President Franklin D. Roosevelt‘s New Deal.
“We hear you. We are laser focused on ensuring the American Dream for young people and that can only happen on the economic level of home buying,” Pulte added. “A 50-year mortgage is simply a potential weapon in a wide arsenal of solutions that we are developing right now: stay tuned.”
The housing market has grown stagnate over the past three years as younger Americans are unable to afford the payments that come with a 30-year fixed rate at more than 6% interest. To add to that, inventory is depleted as homeowners are locked in to their houses with the lower interest rates of the COVID-19 economy.
Both Pulte and Trump have blamed Federal Reserve Chairman Jerome Powell for hiking interest rates to curb inflation and then keeping rates “artificially high.”
While a 50-year mortgage would lower monthly payments, it would also prevent homeowners from building equity as quickly. Over the life of the loan, the amount of interest paid to lenders would be 40% higher, according to analysts who also warn about the need for congressional approval.
“Fannie and Freddie could establish a secondary market for 50-year mortgages in advance of policy changes. They even could buy mortgages for their retained portfolios,” Jaret Seiberg, a financial services and housing policy analyst at TD Cowen, wrote in a note to clients.
“Yet this would not alter the legal liability for lenders. It is why we believe lenders will not originate 50-year mortgages absent qualified mortgage policy changes,” Seiberg said, adding congressional approval could take up to a year to meet the definition of a qualified mortgage under the Dodd-Frank Act.