CHARLESTON – Housing affordability remains so strained the Trump administration is working on a plan to introduce a 50-year mortgage option for homebuyers.
Stretching loans over an additional two decades from the standard 30-year term would help lower monthly payments for those who can’t meet the mortgages for homes that have risen nearly 50 percent in cost in the last five years, combined with 6-plus percent interest rates.
But financial experts say the break doesn’t come without cost.
A 50-year loan would generate more interest than a 30- or 15-year mortgage, with one example showing a $400,000 loan at 6 percent interest could cost a buyer an additional $400,000 more in interest alone.
Federal Housing Finance Agency Director Bill Pulte, whose grandfather founded the national homebuilder company PulteGroup, is leading the charge for President Donald Trump.
“Thanks to President Trump, we are indeed working on The 50-year Mortgage – a complete game changer,” Pulte wrote in a statement on the social platform X.
His comment was in response to Trump’s post on TruthSocial Nov. 8 that compared himself with President Franklin D. Roosevelt, who introduced the 30-year mortgage in 1934 as part of the Federal Housing Administration.
The FHA was established as part of the New Deal to give stability to the housing market during the Great Depression. About 15 years later, 30-year mortgages became the standard.
Wes Sellew, sales manager with Renasant Mortgage in West Ashley, worries a 50-year option will have a negative impact on the market. It might hurt the already low housing supply if people stay in their homes decades longer and would end up costing homeowners more in the end, if they do.
“When you break it down, a 50-year mortgage is going to likely carry a higher rate than a 30-year loan,” he said.
As of Nov. 6, a 30-year fixed-rate mortgage averaged 6.22 percent while a comparable 15-year loan averaged 5.5 percent, according to housing financier Freddie Mac.
In Charleston County, the median home price was $760,000 as of Oct. 31, according to preliminary data from the Charleston Trident Association of Realtors.
Without a full loan – not factoring in the variables of down payment, private mortgage insurance or any insurance or property taxes – the borrower would pay $919,267.55 in interest over 30 years for a $1,679,267.55 cost of the loan, according to calculations by Bankrate. For a 15-year loan, interest amounts to $357,770.17 with a total payout of $1,117,770.17.
Jarrett Hodson, a lender with Sente Mortgage in Charleston, said just because borrowers start with a 30- or 50-year mortgage doesn’t mean they have to stay and pay that long.
“Whether it’s a 15-, 30- or 50-year mortgage, most are paid off within seven years whether it’s a refinance or selling the property,” Hodson said.
He added homeowners also have the flexibility to pay down loans quicker by paying extra each year that goes toward the principal.
A borrower could for example get a 30-year loan and make monthly payments calculated for a 15-year plan and pay off early, Hodson said. The benefit with having the longer runway is if you get into a tight position, you aren’t required to make that higher payment each month.
Sellew noted the people who a 50-year mortgage is targeting most likely won’t be able to make extra payments.
‘More creative ways’ to make housing affordable
Nearly 93 percent of Americans surveyed in a Realtor.com study in October said home prices are too high. They primarily believe investors buying up housing to turn a profit are to blame, along with building materials increasing in price and elected officials not prioritizing policies to make housing more affordable.
Nationally, the median existing-home price was $415,000 in September, while across South Carolina it hit $339,000 – up 2.4 percent year over year, according to the last month of data from the S.C. Realtors Association.
A study by ResiClub, a research company focusing on the U.S. housing market, found that while 40 percent of Americans are mortgage-free, 75 percent are them are over the age of 55. Another 12 percent are between the ages of 45 to 54, while the remaining 13 percent ages are younger than 44.
The math makes sense as homeowners who bought young and in more affordable times were able to pay off those 30-year loans in their 50s. But with the median first-time homebuyer now in their 40s, according to that would leave them paying off their initial loan into their 90s.
That age is up from 33 in 2021 and 29 in 1981.
“We are laser focused on ensuring the American Dream for YOUNG PEOPLE and that can only happen on the economic level of homebuying,” Pulte wrote in a post Nov. 9. “A 50 Year Mortgage is simply a potential weapon in a WIDE arsenal of solutions that we are developing right now.”
Hodson said he’s neither in favor or nor against the loan length, but said it won’t be the single driver that moves the needle on homeownership.
“Rates need to come down,” he said. “That would be more impactful as the amount of savings per month goes up as rates drop.”
Right now, a 30- vs. 50-year mortgage offers 12 percent savings a month. But dropping rates down to 3 percent would instead save a borrower 30 percent, he said.
“Focus on buying bonds and lowering rates,” he said. If the Federal Reserve lowered 30-year loans to 5 percent, it would be the same monthly payment as the potential 50-year offered.
Sellew agreed there are more creative way to getting more people in homes, including buying down interest rates, using incentives and dialing into finances better.
“The best way to get out of this is to build more houses,” he said.
While the idea still speculation, Sellew said the extra two decades could worsen the affordability crisis in Charleston. Prices will go up as people stay in their houses longer, only bumping prices higher as demand swings further away from supply.
“The way you gain equity on the property is through appreciation,” Hodson said.
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