President Donald Trump seems to be making lofty proposals in a bid to encourage homebuying in the U.S. Trump floated the idea of a 50-year mortgage in a social media post.
“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. Yet this would not alter the legal liability for lenders. It is why we believe lenders will not originate 50-year mortgages absent QM [qualified mortgage] policy changes,” wrote Jaret Seiberg, a financial services and housing policy analyst at TD Cowen in a note to clients.
In response to Trump, Federal Housing Finance Agency director Bill Pulte, who oversees Fannie Mae and Freddie Mac, posted that they are “working on it,” and that it would be, “a complete game-changer.”
READ: Donald Trump to privatize mortgage firms Fannie Mae and Freddie Mac (January 3, 2025)
“There is not currently a secondary market for such loans, nor would a robust secondary market be cultivated any time soon,” said Matthew Graham, chief operating officer at Mortgage News Daily. “That means that, in addition to the extremely low amount of principal paid down in earlier years of the loan, the interest rates would also be quite a bit higher than 30-year loans — a double whammy for those with any hope of building equity.”
Graham said that for all practical purposes, the loan would be more akin to an interest-only loan, because very few people would keep a home for 50 years. Homeowners could still gain equity through home price appreciation, but prices have been softening swiftly across the nation this year, with nowhere near the appreciation seen in the years previous.
“This is not the best way to solve housing affordability. The administration would do better to reverse tariff-induced inflation, which is keeping the rates on existing mortgages high,” wrote Joel Berner, senior economist at Realtor.com in a release.
Others note that this new mortgage product would likely depend on Fannie Mae and Freddie Mac remaining under government conservatorship. The Trump administration has said that the two will be taken private and then have an initial public offering sometime in the near future.
“Adoption of a 50-year mortgage product might complicate the path to privatization for Fannie Mae and Freddie Mac,” analysts at Evercore ISI wrote in a note to clients. “That said, we understand that the Administration is expecting the GSEs to remain under conservatorship after it sells roughly a 5% stake to the public. This would allow the Administration to maintain control of the GSEs for the foreseeable future.”
In theory, extending loan terms would lower monthly payments, providing short-term relief for buyers, as seen in the example where a 50-year loan reduces a monthly payment by $233 compared to a 30-year loan. However, experts caution that such a product comes with significant limitations. Equity would build very slowly, and homeowners would face higher total interest costs over the life of the loan.
The lack of an established secondary market for such mortgages, along with potential complications for Fannie Mae and Freddie Mac’s privatization plans, adds uncertainty.
While the proposal could ease immediate affordability pressures, analysts argue broader economic measures, such as addressing inflation or interest rates, may be more effective in improving housing accessibility and long-term financial stability for prospective homeowners.
Using the latest median sale price of a home from September, $415,200, according to the National Association of Realtors, and the current interest rate of about 6.3%, according to Mortgage News Daily, on a 30-year fixed loan with a 20% down payment, the monthly payment of just principal and interest would be $2,056, so if you raise the length to 50 years, at the same interest rate, that payment would be $1,823, a savings of $233 per month.
While a 50-year mortgage might provide short-term relief, it does not address deeper economic pressures such as inflation, rising interest rates, and housing supply shortages.
Experts argue that policies targeting these structural issues, rather than extending loan durations, would likely have a more meaningful and lasting impact on housing accessibility.
In the long term, sustainable affordability solutions require a combination of economic stability, supportive lending practices, and measures to increase the availability of homes for buyers.