Policymakers, social media users, and economists immediately criticized the US government’s proposal for a 50-year mortgage payment plan, arguing that it would not address other fundamental issues with the housing market, such as a shortage of supply and exorbitant interest rates.
Over the weekend, Federal Housing Finance Agency head Bill Pulte stated on X that a 50-year mortgage would be “a complete game changer” for consumers. The federal government’s FHFA oversees Fannie Mae and Freddie Mac, which purchase and guarantee the vast majority of mortgages nationwide.
Since the New Deal, the 30-year mortgage has been the standard method of purchasing a home and is a distinctively American financial product. At a time when the average American lifetime was 66 years old, politicians and bureaucrats sought to establish a standardized mortgage that borrowers could afford and repay during their working years.
The monthly payment for a 30-year mortgage would be $2,288 (€1,974), while the payment for a 50-year mortgage would be $2,022 (€1,745), assuming a conventional 10% down payment and an average interest rate of 6.17%. That is assuming that because a 50-year mortgage has a longer loan term, a bank wouldn’t demand a higher interest rate.
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