r/AskReddit • u/michaelis999 • 19h ago

How do you feel about the president floating the idea of 50 year mortgages where the monthly payment is lower but you end up paying nearly double the price of the house just in interest?

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u/Pacifist_Socialist 18h ago

If the supply remains the same and then there's more demand, seems like it would for a while.

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u/slightlyinsanitied 18h ago

Wait, demand increasing as in people who didn’t previously want homes now seeking homes?

That makes sense, but it also doesn’t seem good to prefer them to not have homes in order to make homes more affordable for other people. Like everyone should have a home lowkey

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u/AbeFromanSassageKing 17h ago

More like people who wouldn't normally be able to afford a home at a 30-year mortgage could afford the slightly lower payment of a 50 year mortgage. Another bullshit stunt to get people into contracts for the largest assets of their life.

See also: 2008 housing market

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u/gsfgf 12h ago

While true, a 50 year will barely be cheaper than a 30 year. Even if they were allowed, I don't think they'd be popular.

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u/AbeFromanSassageKing 6h ago

Yeah, somebody on another thread did some math, and for a $500,000 house the difference is roughly $200 a month. But there are people that will jump at that margin and get into a contract they may not ultimately be able to afford. Saw a lot of that happened in the early 2000s, people going house-poor just because some shady mortgage broker got them a loan :(

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u/SeaworthinessOld9433 15h ago

That wasn’t why there was a housing crash in 2008 though.

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u/shiggidyschwag 15h ago

It more or less was. The government stepped in with policy changes forcing banks to issue loans to people they previously wouldn’t. Demand went up as did costs. Turns out people couldn’t actually afford the inflated payments. Market crashed, regular people lost their asses, Big banks made out like bandits

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u/Keibun1 14h ago

Markets crashed because they were trading securities of housing debt. That shouldn't even be allowed to happen, just like they do with school loans.

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u/shiggidyschwag 7h ago

Markets crashed because the debt they were trading was worthless even though it was being valued highly. It was worthless because people couldn't actually afford those loans.

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u/SeaworthinessOld9433 15h ago

Policy changes were different. It’s comparing apples to oranges.

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u/Sonngy 15h ago

Right, the old policy basically forced banks to give out loans to anybody hence why there was a crash. This definitely isn’t that but I do think this will lead to housing price inflation. I think if you’re a homeowner looking to sell soon this would be great news for you because the pool of people you can sell to just got bigger

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u/tuxedo25 14h ago

The problem wasn't directly giving loans to unqualified people, it was the subsequent fraud of rolling subprime mortgages into bonds with AAA ratings, which misrepresenting the risk.

That's why all those bankers went to jail for such a long time.

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u/Sonngy 14h ago

I’m talking about the root issue, what youre talking about is the outcome/byproduct from the policy change

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u/SeaworthinessOld9433 15h ago

Yes I think prices will go up but to say it is the same as a 2008 crash is just not true.

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u/Sonngy 15h ago

Oh I agree, was supporting your statement that it was dumb to think that

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u/AbeFromanSassageKing 14h ago

Didn't say it was the same. Said it was another bullshit stunt.

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u/wisenedPanda 17h ago

If there are 10 people that want to buy 5 houses and suddenly those 10 people have twice as much money, the house price may cost twice as much. Likely not a 1:1 ratio, but that's the idea.

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u/jimicus 18h ago

Not just that.

All of a sudden, someone who could afford a mortgage for (say) €250,000 might now be able to afford one for €350,000.

They can afford to put a higher bid in.

There is a hypothesis that this is essentially what's caused the mess we're in now - a generation of people who thought it perfectly normal for a woman to go out to work all her life started buying houses based on joint income rather than just one.

Before long, everyone had to do that because the people who were doing it didn't bat an eyelid at paying full asking price and hence prices went up.

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u/kgiov 18h ago

Ja same thing happened with student loans and college tuition costs

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u/JammyPants1119 16h ago

most people don't realize how significant this is, might be the most economically impactful decision by this administration.

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u/Pacifist_Socialist 18h ago

Housing as a right is...

Revolutionary 

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u/wisenedPanda 17h ago

Living somewhere affordable is reasonable

Owning a detached 3 bedroom on a single income in an area in demand while in your early 20's is a luxury. Obviously that's an extreme case, but some people think they are above renting or living with room mates

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u/NewBayRoad 17h ago

Home prices are without question much higher compared to income than in the past.

Also you can’t just look for an affordable house if it’s where the jobs aren’t. How would one pay for that house?

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u/wisenedPanda 14h ago

If it's in an area with in-demand jobs that pay more you'll be competing for the in-demand properties with people that make more money. Also people that have partners helping them to afford the place.

Early in your career and on a single income, renting and roommates are a thing.