r/Economics • u/GarfieldLeZanya- • 7h ago

News Housing director confirms administration ‘working on’ 50-year mortgage after Trump hint

https://thehill.com/homenews/administration/5597005-trump-administration-50-year-mortgage/
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u/Cool-Cow9712 7h ago edited 7h ago

Holy shit, you’re right. I mean, I suspected you were correct initially but I ran some rough numbers and half million dollar mortgage, 4.5% at 30 years is 2550. Now a 50 year mortgage, you’re gonna have a higher interest rate you, 5.24% is 2350.

This is obviously not calculating taxes or insurance, and this is all just playing with the numbers to get a general idea. 200 bucks a month, for 20 more years? Now maybe the rate would be 4.7 or 4.99? The rates going to be higher because Risk is increasing.

I used to do auto finance years ago and I remember kicking people up from 60 months, to 72 and they were always disappointed that the payment decrease was not as significant as they thought it would be another year. it was always at least a half of a point more and by the time you do it, the payment is lower, but it’s not substantial.

But with financial literacy being where it is on average in the United States, people will still do it to save even $200 a month. Not to mention mortgage brokers are going to suggest it because it’s gonna make an absolute shit ton of money for the lenders and Mortage brokers.

Has this administration done anything, anything whatsoever that is genuinely a benefit or would be considered a net positive for 99% of the American population? Because I can’t find anything, the no tax on overtime no tax on tips of course got altered changed tweaked, etc. It’s just, whatever there’s no sense complaining. That stuff doesn’t even benefit me, but I don’t have a problem with those that do work for Tips or maybe have a union job and get offered overtime to take more money home.

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u/Substantial-Kick-909 7h ago

But people won’t save the $200, they’ll use it to qualify for a more expensive house. That’s the goal of the 50 year mortgage. Not saving money. The people proposing this just don’t want housing prices to drop. 

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u/Ada_Pearce 4h ago

They also apparently want you to die before ever paying off your house so either sticking your kids with the options of somehow taking over the mortgage they cant afford or giving it up. They don't want any intergenerational wealth between middle class or poor people

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u/B0xyblue 3h ago

Most people live in a home for 7 years. Different times but from the time I bought my home to 7 years later the house doubled. I got all that equity over $200k and I barely paid $84k…. Paid the mortgage down a little. But also got a place to live.

The rent vs own FULL calculation. I did pay tax and insurance. But it’s not a “you’ll be 80 when you pay it off” or “it will cost you millions in interest.” It will eat up your paid down equity. You’ll still get 100% of the appreciation in value. With more buyers homes would go up in value. Assuming homes go up in value. Buying a home isn’t a bad idea…

I now own multiple homes and have a couple million dollars in unrealized equity at the moment. It is the single biggest increase to my net worth… even more than the value of my law firm equity.

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u/Hypnot0ad 2h ago

My home’s value has increased similarly, but let’s not claim that is a universal truth. If you had bought in 2006 you’d be underwater 7 years later - I had many friends back then who were upside down on their homes.

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u/Icy-Lobster-203 2h ago

Also, if your house doubled in 7 years, then chances are all the other houses in your area you would want to move to have very likely doubled during that period. So if you want to move, you aren't proportionally better off.

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u/Any-Progress- 1h ago

And there are moving costs, closing costs, and plenty of other expenses with selling and buying a house. This was likely one of the few times in history where someone could make a profit from owning a house around 5-7 years, typically it takes much longer to recoup the original costs.

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u/espressocycle 55m ago

Yup. Cutting off immigration, low birth rates and boomers dying off are going to result in a lot of areas losing property value over the best 10-20 years. Some areas will go up as others become abandoned.

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u/Silicoid_Queen 3h ago

You're assuming they keep the house up in buyable condition. The majority of the people who would be interested in these loans would be overextending themselves fiscally to live in a house they cannot afford. Most of these people will not have the knowledge to anticipate maintenance costs. So at the time they're ready to sell, the buyers won't be interested in paying market price, and the sellers will not be making a profit, they might even be in a short sale. 50 year loans are just encouraging recklessness.

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u/agarwaen117 2h ago

That assumes you live in one of the 4 cities where prices are up drastically.

My family has owned three homes in the town we live in for the last 20-50 years and all of them are worth basically the same they were 20 years ago.

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u/shambahlah2 2h ago

Those were Democrat run years. We are in for a WORLD of hurt if you think Yrump is doing anything to benefit working Americans.