This might be the best thing to come from this Admin this year.
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He also wants to allow 50 yr mortgages. Will that work?
Japan is famous for 100 yr mortgages. Tokyo real estate is so valuable (due to easy commutes) that oldest son often inherits. To buy w affordable payments requires very long (inherited?) mortgages.
Japan has had some trouble w long mortgages. Can the U.S. do it better?
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Work for who? If weâre looking to help home buyers in the long-termâŠno, it wonât work. Letâs take a peek - assuming the 50 year mortgage would have the same interest rate (which it wonât) -
https://www.npr.org/2025/11/12/nx-s1-5604384/50-year-mortgage-trump-housing-explainer
"Trump said the criticism is overblown: âAll it means is you pay less per month, you pay it over a longer period of time. Itâs not like a big factor. It might help a little bit.â
Saving $250 per month to spend more than 100% of the original purchase price in added interest. Thatâs not good for anyone but the lenders. God help usâŠ
Yay, the eldest son getâs to inherit his grandparentsâ debt! 100 year mortgages crashed and burned in Japan. It was a terrible idea our administration would only execute more terriblyâŠjust like everything else they touch.
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Nah, I think that is a terrible idea.
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As the term increases it becomes a perpetuity: more and more of the monthly payment goes to interest instead of principal.
Eternal debt: you never actually own your home.
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Median age of home buyers -
This is a serious problem. Average age of 1st home buyers is around 40 years old!
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That picture is true for all lengths of mortgages. Should 30-year mortgages be replaced with 15-year? Back before WW1 home loans were treated like business loans, typically of five-year duration.
Just like 2% down home loans, the major risk is going underwater when prices drop (they do sometimes).
DB2
If you mean âwill people buy themâ then the answer is surely âyes.â If you mean âis that a good ideaâ then the answer is surely âno.â
There have been four major housing busts in US history. Two in the 1800âs, two in the 20th/21st century (1930âs/2008). It looks as though you would have roughly a 50% chance of having your home be underwater at some point during the 50 year term. Of course if youâre going to stay - and keep your job - then itâs irrelevant. Sadly, lots of people fall into the part of the chart where âneed to moveâ and âlose your jobâ intersect.
But that âglobal viewâ doesnât really cover everything, because there are lots of times when the housing bust isnât national, but is severely local. Iâm thinking of the times in the oil patch where Houston and Denver (among other places) had severe housing disruptions.
We all remember the stories of housing price crashes in large sections of Florida and Texas, Tennessee saw some of that a few years back, and the Rust Belt saw housing price declines everywhere from Cleveland to Detroit to Pittsburgh when the steel industry collapsed in the 80âs.
So yeah, youâll see a lot of people âstrandedâ, which is OK if they can wait it out and keep paying the mortgage. If not, well, you know what happens.
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The risk of going underwater on a 50 year mortgage is greater. Apart from more exposure (longer duration) to housing market swings, the period of interest only payments is longer. Not paying principal for longer means slower equity buildup.
Welp, when the average age of first time home buyers is around 40 (because of affordability), saddling oneself with a mortgage payment until 70 might not make sense.
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At the same time, the average homeowner actually keeps their mortgage for just 7-8 years.
DB2
Average may be 7-8 (*does that include 15 year mortgages - even though they are a tiny percentage?), but the median is 12-13.
Think of this data like overdrafts. The average is is likely skewed because of an over-active minority percentage.
*I would look it up myself but I am working today and your site is blocked.
Iâm not sure it makes very much difference. Most people donât keep a mortgage for the term (be it 15, 30, 40 or 50 years); they move or refinance before then.
DB2
Since most people donât stay in their home for fifty years, an interest only loan with 5 yr adjustments make more sense. Solid underwriting and 20% minimum down would probably be needed to insulate lenders from large losses in foreclosure.
@Hawkwin I agree with you that a portable mortgage is a good idea.
Somehow this thread has morphed into a â50 year mortgageâ discussion which is an entirely different topic.
Wendy
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If we instituted the same type of system that the article talks about from the UK and Canada:
Canadian and UK borrowers typically have fixed-rate loans with terms lasting only two to five years. Thatâs vastly different from the 15- and 30-year terms in the U.S. At the end of those short-term loans, homeowners in Canada and the UK can either pay off their mortgages in full or renew them and negotiate new terms.
The shorter loan terms in Canada and the UK lend themselves to portability because borrowers canât lock in an interest rate for decades.
I agree that this would be a good short term idea. It would likely save borrowers some money for a year or two, depending on the 2-5 year original loan term, until they had to renegotiate to a likely higher rate. If you move around quite a bit, a portable mortgage could be good for your first move at least⊠
Pete
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I was thinking it would be a good long-term idea. Letâs say I got a 30 year mortgage at 2.5% in 2020. Why shouldnât I be able to port that mortgage to future homes regardless of how many times I move? The bank would still get paid so it wouldnât harm them. It would benefit me (assuming I could pre-pay the mortgage) because I would have the option of keeping it or getting a better deal.
The housing market would become more flexible since people wouldnât be locked into their home by a low mortgage rate.
I see only winners and no losers.
Wendy
True enough, but that is at least as interesting a topic as an unlikely portable mortgage implementation. I agree that it should probably have its own topic.
That being said, I did do a little back of the envelope calculating the amount of principal, or actual equity, youâd have with a 30 v. 50 year mortgage for a $400K property at 6%
30 year mortgage after 10 years: $65K; after 15 years: $115K
50 year mortgage after 10 years: $17K; after 15 years: $31K.
Just a little fun with numbers.
Pete
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Well, in reading the article, these portable mortgages apply elsewhere specifically to very short-term loans, not long-term, common US mortgages. I wonder how translatable a portable loan system would be to our current system? I would expect it might not get a lot of support from banks and underwriters (they may not see this as âonly winners, not losersâ) and what scenarios would play out if this were somehow forced on them?
Pete
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Banks would love it - as the banks make most of their money from the closing costs. You can be sure that they will charge a service fee every time they have to update the portable mortgage.
It would be the investors, those that purchase the collateralized mortgages that wonât like it as much - but then those clipping coupons on a 3% mortgage donât have high expectations to begin with.
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Yes, likely. Also, moving a loan means re-doing or re-documenting lien priority, title issues, escrow/tax handling, and new property appraisal/underwriting â boosting cost and complexity for originators and servicers so the fees might increase v. just handling a new loan. Would a loan only be portable to a very similarly priced house? If so, then its utility would be limited. If not, would only that portion of the loan left be applied to the new property? (Ex. selling a $300K and buying a $500K home). And, as you point out, investors also might balk a bit as loan portability changes collateral and payoff timing, adding model uncertainty and duration risk.
The other part of this is that portable benefits skew to existing homeowners (those who already have low rates), not renters/first-time buyers; regulators and politicians woud balance mobility benefits against equity concerns.
Pete
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