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Investing.com -- The White House over the weekend said it is weighing support for a 50-year mortgage as part of efforts to tackle the country’s growing housing affordability crisis.
The proposal quickly sparked criticism from economists, lawmakers and social media commentators, who argued that extending loan terms would not solve deeper issues such as limited housing supply and elevated borrowing costs.
Bill Pulte, director of the Federal Housing Finance Agency (FHFA), said on X that a 50-year mortgage would be “a complete game changer” for homebuyers. The FHFA oversees Fannie Mae and Freddie Mac, the government-backed entities that purchase and guarantee most U.S. mortgages.
The 30-year mortgage has long been a hallmark of the American housing market, introduced during the New Deal era to help families purchase homes through predictable, long-term financing. At the time, policymakers aimed to align repayment schedules with borrowers’ working lifespans, when the average American life expectancy was 66 years.
UBS analysts said President Trump’s proposed 50-year mortgage could significantly disrupt U.S. housing finance, warning that while it may slightly improve monthly affordability, it would come at the cost of much higher lifetime interest payments and slower equity buildup.
In a report titled “Potential pros and cons of a 50-year mortgage,” UBS estimated that extending loan terms from 30 to 50 years, assuming a 50-basis-point higher rate, would reduce monthly payments on a median-priced $420,000 home by about $119, or boost a buyer’s purchasing power by roughly $23,000.
However, the bank’s analysts cautioned that such an extension “could double the $ amount of interest paid by the homebuyer on a median-priced home over the life of the loan and significantly slow equity accumulation.”
UBS noted potential structural hurdles to implementing the plan. With Fannie Mae and Freddie Mac still under conservatorship, it’s “possible that these entities could be used to purchase 50-yr mortgages from lenders and package them into securities to sell to investors,” analysts led by John Lovallo said, but changes to the Dodd-Frank Act might be required to classify such loans as qualifying mortgages.
Without that, these products “would likely carry even higher interest rates than what would be required by the longer-maturity alone,” they added.
The team also highlighted demographic challenges, pointing out that the average first-time homebuyer is 40 years old and the overall average is 59, meaning many borrowers “could be deceased before a 50-yr mortgage matures.”
Analysts believe that the most effective way to address housing affordability remains direct government investment in modern construction methods, such as off-site manufacturing and wall-panel systems, which they said can reduce framing time by 30% and waste by 20%.
They argue this is “meaningful considering that research published by the Federal Reserve Board postulated that construction is the only major U.S. industry to have registered negative average productivity growth since 1987.”
The bank’s research found builders have been slow to adopt wall-panel systems due to higher upfront costs, though industry-wide use could boost efficiency and capacity enough to offset those expenses.