"A MARTINEZ, HOST: President Trump has a suggestion - lower monthly mortgage payments. He posted a picture on Truth Social this weekend titled Great American Presidents. It has a portrait of FDR under the banner 30-Year Mortgage. Now, above Trump's head, 50-Year Mortgage. Susan Wachter is a professor of real estate and finance at the Wharton School of Business at the University of Pennsylvania. Susan, so a 50-year mortgage, would that make housing more affordable?"
"SUSAN WACHTER: It might. It's not a good substitute for a 30-year mortgage because it comes with risks - risk to the borrower and to the overall market. MARTINEZ: Yeah, because when you think about it, if it's going to be 20 more years than a 30-year mortgage, the risks are there, right? Anything could happen in between those 20 years that could really be disastrous."
A 50-year mortgage would reduce monthly payments and could help some buyers enter the housing market. The extended loan term raises risks for borrowers and for the overall market and slows accumulation of homeowner equity and wealth. Longer interest exposure means homeowners pay more interest over time and build equity more slowly compared with a 30-year mortgage. The option is unlikely to dominate the market because many buyers will avoid the added risks. Rising rents and job-driven housing demand mean policymakers must pursue other measures to improve affordability and access to homeownership.
Read at www.npr.org
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