Will a 50-Year Mortgage Make Homes More Affordable?(wsj.com)
wsj.com
Will a 50-Year Mortgage Make Homes More Affordable?
https://www.wsj.com/personal-finance/mortgages/will-a-50-year-mortgage-make-homes-more-affordable-heres-how-it-would-work-9f9a1b2e
38 comments
I'd think no, the prices will just increase until monthly payments are the same.
That's exactly what happens when states increase minimum wage levels - rental prices increase until in a matter of months they've absorbed every cent (or more) of the increase.
You could make an argument that for the investment savvy, this is a great move. Say a 30Y payment is $1000/mo. A 50Y payment may be $800/mo. Put the difference ($200/mo) into something like SPY, and in 5 to 10 years, you'll have a small chunk of change that you could tap into.
I doubt many people, if any, will do this though.
I doubt many people, if any, will do this though.
> Say a 30Y payment is $1000/mo. A 50Y payment may be $800/mo.
Maybe? At present the 15-year fixed is at 5.57% and the 30-year is at 6.15%. It's impossible to predict what a 50-year mortgage would cost since we don't know what the government will throw at it or what goofily-named government-sponsored enterprises would be created to buy these mortgages, but... more. The tools banks use to measure the risk of a mortgage right now don't even apply if the common situation becomes that the house and the owner are likely to age out into decrepitude during the life of the loan.
If the 50-year becomes a real thing we can use the government to backstop all this and provide financial support when all the obvious things go wrong (at enormous taxpayer expense). Might as well, we provide a lot of stuff to keep the 30-year going, which is definitely not a loan that would exist otherwise. It's unwise to pretend that this is all a perpetual motion machine that's only going to make itself stronger over time if we use it cleverly.
Maybe? At present the 15-year fixed is at 5.57% and the 30-year is at 6.15%. It's impossible to predict what a 50-year mortgage would cost since we don't know what the government will throw at it or what goofily-named government-sponsored enterprises would be created to buy these mortgages, but... more. The tools banks use to measure the risk of a mortgage right now don't even apply if the common situation becomes that the house and the owner are likely to age out into decrepitude during the life of the loan.
If the 50-year becomes a real thing we can use the government to backstop all this and provide financial support when all the obvious things go wrong (at enormous taxpayer expense). Might as well, we provide a lot of stuff to keep the 30-year going, which is definitely not a loan that would exist otherwise. It's unwise to pretend that this is all a perpetual motion machine that's only going to make itself stronger over time if we use it cleverly.
The excess return from investing the difference can be seen as the premium for the extra risk compared to paying down the principle. What makes sense for a person has to be evaluated in that light, and that the utility of money is not linear. I think a lot of people are willing to exchange a little upside to counter possibility of being unable to make their mortgage payments.
The deltas in monthly payments aren't typically that large.
That's a generous payment estimate. The actual numbers at the current 6.5% are that a $2700 30Y will be a $2450 50Y. It's not a 20% decrease in mortgage payments. It's more like 9%.
And uhhh, there's the small matter of "what you're putting in SPY" being rather offset by the $1M+ extra in payments and interest over the life of the loan.
The only people this benefit, truly, are lenders.
And uhhh, there's the small matter of "what you're putting in SPY" being rather offset by the $1M+ extra in payments and interest over the life of the loan.
The only people this benefit, truly, are lenders.
If rates are 6%, it takes wayyyy longer than 5-10 years to earn more than that on average.
Always goes up is not the usual.
Always goes up is not the usual.
I've heard a few people making this argument, but unless it allows you to pay off your mortgage 20 years early it's still a net loss.
Related (2022):
The existence of the 50-year mortgage shows lenders are desperate (26 points, 33 comments) https://news.ycombinator.com/item?id=32525364
50-Year Mortgages That Children Can Inherit (21 points, 36 comments) https://news.ycombinator.com/item?id=31967700
UK Gover[n]ment keen on 50-year mortgages (27 points, 60 comments) https://news.ycombinator.com/item?id=31958362
50-Year Mortgages That Children Can Inherit (21 points, 36 comments) https://news.ycombinator.com/item?id=31967700
UK Gover[n]ment keen on 50-year mortgages (27 points, 60 comments) https://news.ycombinator.com/item?id=31958362
Buckle up, houses prices going up.
Will it increase the supply of homes?
It facilitates offloading overpriced assets to younger bag holders with insufficient buying power due to stagnant wages and lack of economic potential.
So, unfortunately not.
(increasing supply would take targeted capital cost reduction, monopoly busting around new home builders and their land acquisition partners, and rapidly increasing the trades labor supply by hundreds of thousands of workers in the near term without immigration; none of this is likely to happen within the next three years)
So, unfortunately not.
(increasing supply would take targeted capital cost reduction, monopoly busting around new home builders and their land acquisition partners, and rapidly increasing the trades labor supply by hundreds of thousands of workers in the near term without immigration; none of this is likely to happen within the next three years)
> It facilitates offloading overpriced assets to younger bag holders with insufficient buying power due to stagnant wages and lack of economic potential.
As someone who holds excess capital this makes me so hard.
15 year car loans?
As someone who holds excess capital this makes me so hard.
15 year car loans?
So, practically speaking we need a modern form of a medieval land reform.
Yeah, we've had the same land ownership system for 188 cycles but maybe the outcome in the 189th will be different!
I’m unsure if that solves this.
China has built enough housing for everyone who will ever live in China, because they overbuilt during their housing frenzy [1] and they’ve reached the decline of the population curve where more people are dying every year versus those being born. Japan has more housing than people because their population has also reached the population curve decline [2], and will continue to decline forever (creating surplus housing supply). We need enough housing to cover peak population in each country [3], but also a system to lock out investment from front running humans for the ownership. Otherwise, Capital will consume housing while also trying to destroy jobs with offshoring, AI, and automation. To those who say, “just build more,” well, let me know when you’re going to show up to pour a foundation and start framing, because the evidence is robust in the US we’re having a heck of a time building more supply. You have to build more (which includes supply chains for affordable materials and a constant supply of tradespeople), and what you do build, ensure that supply gets into the hands of folks who need affordable housing (instead of housing anyone under 40 cannot afford, or entire built to order subdivisions by investors that are going to be rented out). The political will is lacking, because strong policy intervention will be required.
If immigration in flows to the US have mostly stopped due to this administration’s policies, ~2M+ people a year 55+ die every year, and ~3M people turn 18 every year, assuming a continuing declining total fertility rate (currently 1.6 and continuing to fall) and smaller family formation (couples and families with only 1-2 children, if any, versus families >4), what is the target build rate and the delta to get there? You can either build more, destroy demand, or some combination of both.
I’ve seen various reports that the housing shortage is anywhere between 2M-8M units, but I think Fannie Mae’s estimate of ~4M is likely the most accurate [4]. I’m a big fan of the Vienna public housing model [5], but again, political appetite is lacking to implement.
[1] https://www.wsj.com/world/china/china-housing-glut-populatio... | https://archive.today/OqYat
[2] https://finance.yahoo.com/news/look-japans-reverse-housing-c...
[3] https://www.sas.upenn.edu/~jesusfv/Slides_London.pdf
[4] https://news.ycombinator.com/item?id=38252549
[5] https://www.newstatesman.com/spotlight/economic-growth/regio...
China has built enough housing for everyone who will ever live in China, because they overbuilt during their housing frenzy [1] and they’ve reached the decline of the population curve where more people are dying every year versus those being born. Japan has more housing than people because their population has also reached the population curve decline [2], and will continue to decline forever (creating surplus housing supply). We need enough housing to cover peak population in each country [3], but also a system to lock out investment from front running humans for the ownership. Otherwise, Capital will consume housing while also trying to destroy jobs with offshoring, AI, and automation. To those who say, “just build more,” well, let me know when you’re going to show up to pour a foundation and start framing, because the evidence is robust in the US we’re having a heck of a time building more supply. You have to build more (which includes supply chains for affordable materials and a constant supply of tradespeople), and what you do build, ensure that supply gets into the hands of folks who need affordable housing (instead of housing anyone under 40 cannot afford, or entire built to order subdivisions by investors that are going to be rented out). The political will is lacking, because strong policy intervention will be required.
If immigration in flows to the US have mostly stopped due to this administration’s policies, ~2M+ people a year 55+ die every year, and ~3M people turn 18 every year, assuming a continuing declining total fertility rate (currently 1.6 and continuing to fall) and smaller family formation (couples and families with only 1-2 children, if any, versus families >4), what is the target build rate and the delta to get there? You can either build more, destroy demand, or some combination of both.
I’ve seen various reports that the housing shortage is anywhere between 2M-8M units, but I think Fannie Mae’s estimate of ~4M is likely the most accurate [4]. I’m a big fan of the Vienna public housing model [5], but again, political appetite is lacking to implement.
[1] https://www.wsj.com/world/china/china-housing-glut-populatio... | https://archive.today/OqYat
[2] https://finance.yahoo.com/news/look-japans-reverse-housing-c...
[3] https://www.sas.upenn.edu/~jesusfv/Slides_London.pdf
[4] https://news.ycombinator.com/item?id=38252549
[5] https://www.newstatesman.com/spotlight/economic-growth/regio...
Buffalo NY used to have twice as much housing as it does today because it had twice as many people, but housing doesn’t just persist if it isn’t needed and used, it decays quickly and disappears. If everyone wants to live in a few hot cities in China, it doesn’t matter if Kangbashi in Ordos Inner Mongolia has a bunch of vacant apartments.
Even if the US builds more, how many more people can we fit in Seattle, San Francisco, New York City? We have to build in Buffalo, Toledo, Shreveport also, but getting people to live in those cities rather than bid up housing in the former is impossible without some sort of residency control (like Chinese hukou which no longer works well there either).
We know what happens when population begins to decrease, you get some affordability in Tokyo and even more in places where people are moving to Tokyo from. Could that work here? Maybe.
Even if the US builds more, how many more people can we fit in Seattle, San Francisco, New York City? We have to build in Buffalo, Toledo, Shreveport also, but getting people to live in those cities rather than bid up housing in the former is impossible without some sort of residency control (like Chinese hukou which no longer works well there either).
We know what happens when population begins to decrease, you get some affordability in Tokyo and even more in places where people are moving to Tokyo from. Could that work here? Maybe.
I think it’s almost impossible to build enough housing so everyone can live exactly where they want (unless something drastic happens with regards to policy, capital, construction, etc, think New Deal but targeting housing), but also think it’s entirely possible to have enough housing stock so we don’t have hundreds of thousands of people homeless. I cannot predict what the next few decades look like unfortunately, and how long it will take for demographics to ease housing pressure.
(I cannot speak to Buffalo, but I donate to A Tiny Home For Good, which provides housing for the disadvantaged in Syracuse; I strongly believe their model would scale given appropriate resources, as it relates to homelessness)
https://www.atinyhomeforgood.org/about
https://usafacts.org/articles/how-many-homeless-people-are-i...
(I cannot speak to Buffalo, but I donate to A Tiny Home For Good, which provides housing for the disadvantaged in Syracuse; I strongly believe their model would scale given appropriate resources, as it relates to homelessness)
https://www.atinyhomeforgood.org/about
https://usafacts.org/articles/how-many-homeless-people-are-i...
We really screwed the pooch on remote work, which would have made it less important to live in “the hot city” and would have let people live in Toledo or Buffalo if they wanted.
There are multiple categories of homeless people, with some (the most visible ones) choosing what cities they are unhoused in. Seattle (where I live) is never going to be able to house all of them: the more money we throw at the problem (and we spend a lot!), the worse it gets for obvious reasons. It is much easier to solve homeless problems in a city that isn’t a destination due to climate, social services spending, or drug availability. We do lots of tiny home villages here also, they cost around $100k/year/unit to run, which doesn’t make sense, but that’s what the non profits are charging and what the city/county are paying.
There are multiple categories of homeless people, with some (the most visible ones) choosing what cities they are unhoused in. Seattle (where I live) is never going to be able to house all of them: the more money we throw at the problem (and we spend a lot!), the worse it gets for obvious reasons. It is much easier to solve homeless problems in a city that isn’t a destination due to climate, social services spending, or drug availability. We do lots of tiny home villages here also, they cost around $100k/year/unit to run, which doesn’t make sense, but that’s what the non profits are charging and what the city/county are paying.
> We really screwed the pooch on remote work, which would have made it less important to live in “the hot city” and would have let people live in Toledo or Buffalo if they wanted.
Indeed.
The Great Reshuffle: Remote Work and Residential Sorting - https://fedinprint.org/item/fedpwp/102079/original | https://www.philadelphiafed.org/-/media/FRBP/Assets/working-... [pdf] | https://doi.org/10.21799/frbp.wp.2025.36
> This paper studies the significance of migration in evaluating the welfare impacts of remote work. By analyzing individual location history data, we first document an increase in net migration towards suburbs and smaller cities in the US since 2020. We demonstrate that the migration wave has been disproportionately fueled by high-income individuals, who were more likely to move due to remote work. Consequently, regions with substantial in-migration observed the greatest rise in housing expenses. This also led to changes in local demand for services and associated employment. Employing a stylized welfare accounting framework, we show that migration mitigated the increase in housing cost burdens for both high- and low-income groups, with the advantages being greater for low-income individuals. Conversely, dispersed job growth, as a result of migration away from major urban centers, curtailed the increase in job accessibility, especially for high-income groups. Factoring in the spatial impacts of migration on housing costs and job accessibility, the welfare inequality surge related to remote work is considerably tempered.
Indeed.
The Great Reshuffle: Remote Work and Residential Sorting - https://fedinprint.org/item/fedpwp/102079/original | https://www.philadelphiafed.org/-/media/FRBP/Assets/working-... [pdf] | https://doi.org/10.21799/frbp.wp.2025.36
> This paper studies the significance of migration in evaluating the welfare impacts of remote work. By analyzing individual location history data, we first document an increase in net migration towards suburbs and smaller cities in the US since 2020. We demonstrate that the migration wave has been disproportionately fueled by high-income individuals, who were more likely to move due to remote work. Consequently, regions with substantial in-migration observed the greatest rise in housing expenses. This also led to changes in local demand for services and associated employment. Employing a stylized welfare accounting framework, we show that migration mitigated the increase in housing cost burdens for both high- and low-income groups, with the advantages being greater for low-income individuals. Conversely, dispersed job growth, as a result of migration away from major urban centers, curtailed the increase in job accessibility, especially for high-income groups. Factoring in the spatial impacts of migration on housing costs and job accessibility, the welfare inequality surge related to remote work is considerably tempered.
Barely, month to month. At current rates a $2700 mortgage might go to about $2400...
... in exchange for over a million dollars more paid over the life of the loan.
I don't think that's making any meaningful difference to anyone other than lenders.
... in exchange for over a million dollars more paid over the life of the loan.
I don't think that's making any meaningful difference to anyone other than lenders.
If you increase mortgages to 50 years and keep the number of houses too low, houses prices will go up until the monthly payments return to the level of borderline unaffordability.
Another way to think about it. Longer mortgages means more available buyers (for a given price level). More buyers means prices up.
Another way to think about it. Longer mortgages means more available buyers (for a given price level). More buyers means prices up.
Also true. Just like every time (not that it's happened recently, at least at the federal level, more common at the state) minimum wage has risen, you can basically track an increase in rental prices to ever so seamlessly absorb every cent of it within a matter of months...
None of this is being done for the actual struggling people in the community.
None of this is being done for the actual struggling people in the community.
This will mean extending loans to those that current lenders are not making loans too. So rates will have to increase in order cover increased defaults (the borrowers aren't different). Increasing interest rates will drop prices.
Or maybe it's the reverse.
Or maybe it's the reverse.
It might work if inflation is high and you make extra payments at the beginning of the loan. So you have 50 years to pay it off doesn’t mean you have to make minimum payments, you could get the principle down at the beginning and then get your repayments redone later in the loan to have something manageable. Inflation and appreciation would eat away at the loans value, you would be paying off a loan from 30 years ago with today’s money, your property taxes would likely be more than your house payment by then.
However, USA’s fixed interest rates, and your ability to refinance to a lower rate, aren’t really sustainable in a 59 year loan (they aren’t sustainable for 30 year loans). A lot of people are going to be locked into the same house for generations because they got a good rate 30-40 years ago. Also, it doesn’t really increase supply, we are going to quickly degrade into a European housing market of interest only loans and renting as a normal way of life.
However, USA’s fixed interest rates, and your ability to refinance to a lower rate, aren’t really sustainable in a 59 year loan (they aren’t sustainable for 30 year loans). A lot of people are going to be locked into the same house for generations because they got a good rate 30-40 years ago. Also, it doesn’t really increase supply, we are going to quickly degrade into a European housing market of interest only loans and renting as a normal way of life.
This does nothing for the down payment which is the bigger hurdle compared to monthlies?
You don’t have to put down 20% as a first time homebuyer
[deleted]
O yes everybody loves PMI
If immigration remains low, then won't the demographic shift in the US population eventually free up more housing stock. In other words, Boomers die off. Gen X is fairly small, more empty homes? Is something like this happening in Japan or SK?
Homes are lucrative investment vehicles. I’d expect many of these to get gobbled up people and companies looking to make a buck.
Terrible idea.
But if it mimics the rise of the same idea in Japan, it could indicate peak real estate as coincided relatively closely with the introduction of the 50 year mortgage in Japana,
Different circumstances, different “song”. But perhaps a similar tune.
But if it mimics the rise of the same idea in Japan, it could indicate peak real estate as coincided relatively closely with the introduction of the 50 year mortgage in Japana,
Different circumstances, different “song”. But perhaps a similar tune.
Will Betteridge's law of headlines ever be defeated?
BTW if you're commenting you should vote the story up so other people can see it.
BTW if you're commenting you should vote the story up so other people can see it.
TLDR: No.
The supply will stay the same, the demand and therefore the prices will increase.
Only the property owners and lenders will make money.
The supply will stay the same, the demand and therefore the prices will increase.
Only the property owners and lenders will make money.