Move over, 30-year mortgage. The Trump White House is working on a 50-year option to break the housing market gridlock

Core Viewpoint - The Trump administration is proposing a 50-year fixed-rate mortgage to enhance homeownership accessibility for Americans facing high housing costs and affordability issues [1][3]. Group 1: Mortgage Proposal - The proposed 50-year mortgage aims to lower monthly payments by extending the amortization period, with estimates showing a monthly payment of $2,572 for a 50-year mortgage on a $400,000 home at a 6.575% interest rate [6]. - The initiative is compared to the 30-year mortgage policies from the New Deal era, highlighting its potential impact on homeownership [2]. Group 2: Current Housing Market Challenges - The average U.S. household currently spends about 39% of its monthly income on mortgage repayments, significantly above long-term affordability benchmarks [3]. - The "lock-in effect" has led to a stagnation in the housing market, as many homeowners are reluctant to sell due to low interest rates secured prior to 2022 [4]. - The average age of first-time homebuyers has risen to 40 years, indicating a growing challenge for younger Americans to enter the housing market [8]. Group 3: Market Reactions and Alternatives - Adjustable-rate mortgages have gained popularity, now accounting for over 10% of mortgage applications, the highest level since 2021 [5]. - Critics of the 50-year mortgage warn that it may increase total interest paid and slow equity buildup, potentially trapping borrowers in long-term debt [7]. Group 4: Fannie Mae and Freddie Mac Developments - The proposal coincides with discussions about Fannie Mae and Freddie Mac potentially taking equity stakes in private-sector companies, similar to a previous deal with Intel [10][11]. - The administration emphasizes a focus on ensuring homeownership opportunities for young people as part of a broader strategy to address economic challenges [5].