50-Year Mortgages and the Illusion of Affordability

[Luis Gonzalez]

50-Year Mortgages and the Illusion of Affordability
Why the administration’s embrace of 50-year mortgages treats the housing affordability crisis as a payment problem rather than a wealth and supply problem.

The Last Wire

A Familiar Policy Reflex in an Unfamiliar Crisis

As housing affordability continues to deteriorate, the administration has floated the idea of 50-year mortgages as a way to help younger and first-time buyers enter the market. The logic is simple. Extend the loan term, reduce the monthly payment, and ownership becomes attainable again.

This approach reflects a familiar policy reflex. Monthly payment replaces total cost. Entry replaces ownership. Optics replace outcomes.

But the housing affordability crisis is not driven by mortgage length. It is driven by structural supply shortages, policy-driven cost increases, and an inflation shock that permanently reset prices upward. Stretching mortgage terms does not reverse those forces. It redistributes who bears their cost and for how long.

Affordability framed as a monthly payment ignores the compounding cost of delayed ownership.

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[DefiantMassRINO]

50-year mortgages are gimmick to lower monthly mortage (principal and interest) payments.

On the surface, this is feasable with low(er) mortgage rates.  With the way amoritization works, higher rates may lead to higher mortgage payments.

The front-end payments of a mortgage are mostly interest.  It is only when you get to the backend of the mortgage that payments skew towards more principal than interest.

Plus, in a free marketplace, a 50-year rate would be higher than a 30-year rate.  50-year mortgage duration = greater risk to the lender than 30-year duration.  Also, the interest needs to compenstate for 50 years of inflation versus 30 years of inflation.

The most sustainable means of lowering monthly mortgage (principle and interest) payments is to lower the price of housing by providing more supply to balance with the demand.

Anything less than building more housing units is an amoritization gimmick and a political fraud.

Do not allow Wall Street Real Estate Investment Trusts (REITs), Pirate Equity, Vulture Capital, and Hedge Funds to own single units of housing to rent.  This can be done by making them ineligible for Federally underwritten mortgages and by changing IRS tax code.  These firms should only be advantaged for owning buildings with more than 4 units.

The end results needs to be:

- Build more housing units.
- Put more single units of housing in the hands of owner-occupants.
- Put more multifamily homes with less than 5 units into the hands of local owner-occupants.