In another attempt to make home buying more affordable, President Donald Trump floated the idea of a 50-year mortgage in a social media post. In response, Federal Housing Finance Agency Director Bill Pulte, who oversees Fannie Mae and Freddie Mac, said they were “working on it” and it would be a “complete game changer.”
The purpose of a longer-term mortgage would be to reduce homeowners’ monthly payment. The longer the term of the loan, the lower the capital required each month to repay it in full. But such a plan has other compromises.
Using the latest median home sales price 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 principal and interest payment would be $2,056. If you increase the term to 50 years, at the same interest rate, that payment would be $1,823, a savings of $233 per month.
However, homeowners would not build their equity as quickly because their capital repayments would be lower. The amount of interest paid to lenders would be 40% higher.
How could this work?
The real question is whether Fannie and Freddie can do this. Analysts say it’s possible, but a 50-year mortgage currently doesn’t meet the definition of a qualified mortgage under the Dodd-Frank Act, which offers investors support from Fannie and Freddie in the event of a loan default. But regulators have been given the power to change this to ensure mortgage affordability. That could take up to a year, however, given the need to get approval from Congress, according to Jaret Seiberg, financial services and housing policy analyst at TD Cowen.
“Fannie and Freddie could establish a secondary market for 50-year mortgages before the policy changes. They could even purchase mortgages for their retained portfolios. Yet this would not change the lenders’ legal liability. This is why we believe lenders will not write 50-year mortgages without QM. [qualified mortgage] policy changes,” Seiberg wrote in a note to clients.
What impact would this have on rates?
Then there is the question of the mortgage rate. The average rate for a 15-year fixed mortgage is currently 66 basis points lower than the rate for a 30-year fixed mortgage, according to the Mortgage Bankers Association. This would imply that the 50-year fixed rate would be higher. It all depends on investor demand for the product.
“There is currently no secondary market for such loans, and a robust secondary market will not be created anytime soon,” said Matthew Graham, chief operating officer at Mortgage News Daily. “This means that in addition to the extremely low amount of principal repaid in the first few years of the loan, interest rates would also be somewhat higher than those for 30-year loans – a double whammy for those who have any hope of building equity.”
Graham said that for all practical purposes the loan would be more of an interest-only loan because very few people would keep a home for 50 years. Homeowners could still gain equity from home price appreciation, but prices have declined rapidly across the country this year, not coming close to the appreciation seen in previous years.
How does this impact affordability
Even real estate agents agree that the savings for homeowners would be minimal.
“This is not the best way to solve the housing affordability problem. The administration would be better off reversing tariff-induced inflation, which is keeping existing mortgage rates high,” Joel Berner, senior economist at Realtor.com, wrote in a statement.
Others note that this new mortgage product would likely depend on Fannie Mae and Freddie Mac remaining under government supervision. The Trump administration said both companies would be taken private and then go public in the near future.
“Adopting a 50-year mortgage product could complicate the path to privatization for Fannie Mae and Freddie Mac,” Evercore ISI analysts wrote in a note to clients. “That said, we understand that the Administration expects the GSEs to remain in conservatorship after selling approximately 5% of its ownership interest to the public. This would allow the Administration to retain control of the GSEs for the foreseeable future.”
Housing affordability has been a major pressure point for the Trump administration. Historically low interest rates resulting from pandemic-induced economic policy have sparked a historic run on real estate that has catapulted home prices more than 50% higher in just five years. As a result, home sales have declined significantly, as has demand for mortgages.
The average age of a typical first-time buyer in 1991 was 28 years old. By 2024, it had reached 38, according to a report from the National Association of Realtors, whose deputy chief economist called the figure “shocking.”
The Trump administration has been pressuring builders to build more housing to drive down prices, saying they are sitting on an oversupply of empty land. Builders dispute this claim and continue to cite high costs for land, labor and materials.
During the company’s last earnings call, Pulte Group CEO Ryan Marshall said he agreed with the president’s outlook regarding an undersupply of approximately 4 million homes for sale, but added, “While this supply gap certainly impacts affordability in general, the complexities of the new home construction industry dictate that tackling a problem of this magnitude requires a coordinated, comprehensive approach that brings together federal, state and local leaders working in partnership with the new home construction industry.”
