Key Highlights
- Donald Trump proposed a 50-year mortgage on social media.
- FHFA Director Bill Pulte confirmed the proposal is under development.
- A longer amortization term would lower monthly payments but reduce equity.
- The Qualified Mortgage (QM) rule currently disallows mortgages over 30 years.
Trump’s Proposal: A 50-Year Mortgage for Housing Affordability
On Saturday, former President Donald Trump posted an image on social media suggesting he would propose a 50-year mortgage to enhance housing affordability. This move comes at a time when the U.S. is grappling with rising home prices and interest rates.
The Proposal and Its Confirmation
In the image shared by Trump, his headshot was placed under the title “50-Year Mortgage,” while that of President Franklin Delano Roosevelt was labeled as the 30-year mortgage. Shortly after, FHFA Director Bill Pulte confirmed to X (formerly known as Twitter) that they are indeed working on this proposal, describing it as a “complete game changer.”
While details remain sparse, the confirmation suggests that Trump’s push for longer-term mortgages is backed by the government agency responsible for overseeing Fannie Mae and Freddie Mac.
Impact on Monthly Payments
A 50-year mortgage would significantly reduce monthly payments compared to traditional 30-year fixed-rate mortgages. According to calculations using Fannie Mae’s mortgage loan calculator, with a down payment of 20% and an interest rate of 6.575%, the following monthly payments can be expected:
$300,000 – 30-year fixed: $1,529
40-year fixed: $1,418
50-year fixed: $1,366
$400,000 – 30-year fixed: $2,038
40-year fixed: $1,891
50-year fixed: $1,822
$500,000 – 30-year fixed: $2,548
40-year fixed: $2,363
50-year fixed: $2,277
Legal and Practical Challenges
The proposal faces significant legal hurdles. The Dodd-Frank Wall Street Consumer Protection Act, passed after the 2008 financial crisis, imposes stricter mortgage underwriting standards. One of these is the Qualified Mortgage (QM) rule, which currently disallows mortgages with terms exceeding 30 years.
Expert Logan Mohtashami from HousingWire argues against the proposal: “Subsidizing more demand through longer amortization is not a policy we want to take now.” He emphasizes that housing should balance itself out through slowing home-price growth and wage increases, which he believes would be hindered by such a policy.
Future Implications
The 50-year mortgage proposal could have far-reaching implications if implemented. While it may provide immediate relief to buyers facing higher monthly payments, it could also delay the accumulation of equity in homeownership. Additionally, as Mohtashami points out, there are legal obstacles that would need to be overcome for widespread adoption.
For now, the proposal remains a work-in-progress with no official announcement on the White House press page. As housing affordability continues to be a critical issue, this development could signal a shift in policy towards making homeownership more accessible over the long term.
