Is Donald Trump proposing a 50-year mortgage? What to know about long-term loans

Core Viewpoint - President Trump proposed the idea of 50-year mortgages, which has sparked criticism and concern regarding its implications for borrowers and the housing market [1][2]. Group 1: Proposal and Reactions - The Federal Housing Finance Agency is reportedly working on the 50-year mortgage concept, which is described as a potential "game changer" [1]. - Some political allies, including Rep. Marjorie Taylor Greene, oppose the proposal, arguing it benefits banks and lenders while increasing the total interest paid by homeowners [2]. Group 2: Financial Implications - Extending mortgage terms from 30 to 50 years could lower monthly payments; for example, a $500,000 mortgage could see a monthly payment reduction of approximately $340 [3]. - However, longer loan terms typically come with higher interest rates due to increased risk for lenders, as evidenced by the difference in rates between 15-year and 30-year loans [4]. Group 3: Equity Concerns - Longer loan terms result in less equity accumulation for homeowners, as a smaller portion of monthly payments goes toward building equity [5]. - Historical evidence from the subprime mortgage crisis indicates that homeowners with negative equity are significantly more likely to default on their loans, with a likelihood increase of 150% to 200% compared to those with positive equity [6][7].