Trump wants to bring in 50-year mortgages. Could it help — or hurt?
Global News
U.S. President Donald Trump has proposed introducing a 50-year mortgage to spur activity in the housing market. But experts say Canadians are unlikely to follow suit.
U.S. President Donald Trump may be touting them as a solution to the housing crisis in that country, but experts say the 50-year mortgage is unlikely to find takers in Canada.
Last week, Trump posted on social media, comparing his proposal to offer longer mortgage terms to former U.S. president Franklin D. Roosevelt’s proposal for 30-year mortgages.
“Thanks to President Trump, we are indeed working on The 50 year Mortgage – a complete game changer,” U.S. director of federal housing Bill Pulte posted on social media following Trump’s post.
The White House says this will help lower monthly mortgage payments, helping new people enter the housing market, but it quickly drew criticism from policymakers, social media and economists.
Extending the life of a mortgage to 50 years does decrease a borrower’s monthly payment, the Associated Press and U.S. analysts noted in an assessment of the proposal.
The average selling price of a home in the U.S. was US$415,200 in September, according to National Association of Realtors.
Assuming a standard 10 per cent down payment and an average interest rate of 6.17 per cent, the monthly payment on a 30-year mortgage would be US$2,288 while the payment on a 50-year mortgage would be US$2,022.
That’s presuming a bank would not require a higher interest rate on a 50-year mortgage, due to the longer duration of the loan.
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