Exploration of 50-Year and Portable Mortgages Draws Skeptics

Members of Donald Trump’s administration, particularly Federal Housing Finance Agency director Bill Pulte, are looking for ways to make housing and mortgages more affordable. So far, the proposals are largely falling on deaf ears.

Over the weekend, the president posted on Truth Social about the possibility of 50-year mortgages, well beyond the standard long-term 30-year loan. Days later, Pulte said that Fannie Mae and Freddie Mac were exploring adopting assumable mortgages — not unheard of in the United States — and the unicorn portable mortgage.

The housing industry doesn’t appear to be taking either proposal too seriously.

The logic behind a 50-year mortgage term is simple enough. Instead of spreading payments over 10, 15 or 30 years, they extend to a half-century. That could lead to lower monthly payments; UBS Securities’ John Lovallo determined the monthly payment on a median-priced home would be cut by $119, according to Fortune.

The short-term good news for borrowers, however, could bring long-term harm. Because buyers are paying interest on the loans, the extension of the term greatly increases the amount of interest they’re accruing. Additionally, borrowers will have a harder time building equity, a key benefit of homeownership.

A $500,000 50-year loan with a 6.1 percent rate would accumulate up to $1.1 million in interest, according to a LendingTree analysis, which is more than double the price of the home. For comparison, a 30-year loan would accumulate only $590,791.

Lower rates don’t carry better results. The same 50-year loan at a 4 percent rate would lead to $657,000 in interest accrual and equity in the home would only grow at minimal levels.

Perhaps aware of the swift criticism drawn by the 50-year mortgage proposal, the president downplayed it in a Fox News interview days later.

Then, Pulte brought up another new idea: portable mortgages. These are loans that borrowers can transfer from one property to the next and they are common in other countries, but almost nonexistent in the United States.

Because of the way mortgages are structured, it would be complex to transform any active, conventional mortgage into a portable mortgage because the loans are secured by the property.

The industry wasn’t taken with this proposal either.

“I don’t believe there’s an actual vehicle or mechanism that would be within the director’s power or ability to even make a mortgage fully portable,” Absolute Home Mortgage chief executive officer Matthew VanFossen told HousingWire.