Opinion: Trump's 50-year mortgage won't fix the housing affordability crisis

"It sounds attractive at first because stretching out repaying of a mortgage would lower the borrower's monthly payment, but this wouldn't fix the homeownership affordability crisis. It's no exaggeration to name the current situation as a crisis. According to the Federal Reserve Bank of Atlanta, the percentage of a household's income needed to afford just a median price home is near a record high today, and affordability is near a record low."

"The profligate spending of the Biden administration and the monetary mismanagement of the Federal Reserve caused both home prices and interest rates to skyrocket, a deadly one-two punch that knocked out the housing market. Because home prices and interest rates are the primary factors in determining a potential buyer's monthly mortgage payment, when those two inputs quickly rose, Americans saw the monthly mortgage payment on a median price home more than double in less than four years. If that's not an affordability crisis, nothing is."

"Further exacerbating the problem is the fact that millions of Americans bought a home or refinanced in 2020 and 2021 at abnormally low interest rates and effectively cannot sell their homes in today's market of relatively high interest rates. The reason for this phenomenon is that the seller almost always must pay off the existing mortgage on a home at the time of sale, ending that mortgage."

Stretching mortgage repayment to 50 years reduces monthly payments but does not resolve fundamental affordability problems. The share of household income required for a median-priced home is near a record high, while affordability is near a record low. Rapid increases in both home prices and interest rates have more than doubled typical monthly mortgage payments in under four years. Many homeowners who locked in very low rates in 2020–21 cannot move without facing much higher payments, which effectively freezes transactions. Extending loan terms does not lower purchase prices or market interest rates and therefore cannot restore broad homeownership affordability.

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