Buffalo, N.Y. (WBEN) - The Trump administration, including the Director of the Federal Housing Finance Agency, has been entertaining the idea for the government to back 50-year mortgages to address a housing affordability.
It's a plan that the administration calls transformative in a way that the introduction of the 30-year mortgage was during the Great Depression. Many others, including Republicans, argue it would instead cost Americans more money while banks get richer.
The idea would be that homeowners would pay a smaller amount each month than the average 30-year mortgage, while also would paying more interest over the course of the loan.
"From a financial perspective... it's going to be potentially three times as much interest," said Michael Angelucci of Level Financial Advisors. "If it does make housing more affordable, it could continue to drive the price of housing up, so it could counter the benefit it's trying to create."
All of this is assuming you live to see the end of the loan.
"The 50-year mortgage is not a good idea," said Peter Hunt, Executive Chairman of Hunt Real Estate. "The average age of a first time homebuyer is now at a record high 40-years-old. It used to be 26. People are waiting longer to buy a home, and if you buy a home at age 40 and you've got a 50-year mortgage, I don't think a lot of people are going to be in that home when they're 90-years-old."
The average rate for a 30-year mortgage was 6.22%, while the rate for a 15-year mortgage was 5.5%, according to data released by Freddie Mac. A 50-year mortgage would likely see a higher rate, which combined with a lower monthly payment would make it more difficult to build equity.