"The White House says it is considering backing a 50-year mortgage to help alleviate the home affordability crisis in the country. But the announcement drew immediate criticism from policymakers, social media and economists, who said a 50-year mortgage would do little to resolve other core problems in the housing market, such as a lack of supply and high interest rates."
"Bill Pulte, director of the Federal Housing Finance Agency, said on X over the weekend that a 50-year mortgage would be "a complete game changer" for homebuyers. FHFA is the part of the federal government that oversees Fannie Mae and Freddie Mac, which buy and insure the vast majority of mortgages in the country."
"Extending the life of a mortgage to 50 years does decrease a borrower's monthly payment. The average selling price of a home in the U.S. was $415,200 in September, according to National Association of Realtors. Assuming a standard 10% down payment and an average interest rate of 6.17%, the monthly payment on a 30-year mortgage would be $2,288 while the payment on a 50-year mortgage would be $2,022. That's presuming a bank would not require a higher interest rate on a 50-year mortgage, due to the longer duration of the loan."
A 50-year mortgage proposal would lower monthly payments but would not address core housing market issues like low supply and high interest rates. Extending loan terms spreads principal over more years, reducing monthly cost but shifting a larger share of payments to interest. Using a $415,200 average home price with 10% down and 6.17% interest, a 30-year payment is $2,288 versus $2,022 on a 50-year loan if rates remain equal. Longer terms substantially delay equity accumulation, and oversight by FHFA connects the idea to Fannie Mae and Freddie Mac.
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