Trump’s Risky Mortgage Gambit: Short-Term Relief, Long-Term Risk
President Donald Trump and his administration are floating a series of bold mortgage proposals aimed at making homeownership more affordable — but experts are raising red flags about the long-term costs.
What’s on the Table?
Here are the key financing ideas under consideration:
- 50-Year Mortgages
- This proposal would extend the traditional 30-year mortgage to 50 years, lowering monthly payments.
- But the trade-off is steep: far more interest over the life of the loan and much slower accumulation of home equity.
- Economists warn that while the monthly payment drop may look attractive, the total cost could balloon significantly.
- There’s also concern that such long-term debt could worsen market risk and lock borrowers into decades of payments.
- Assumable & Portable Mortgages
- Assumable Mortgages: Buyers could take over a seller’s existing low-rate mortgage.
- Portable Mortgages: Homeowners might be able to carry their mortgage (and its favorable rate) to a new property — a concept not yet implemented in the U.S.
- These options would help some buyers, but they could also favor repeat buyers or those who already secured a good rate, potentially driving up demand and pushing home prices higher.
- Assumable mortgages, while beneficial, come with hurdles: buyers must qualify, and they may need to make a large payment to bridge the difference between home price and remaining mortgage balance.
- Builder Rate Buy-Downs
- Homebuilders might offer to buy down interest rates on mortgages for buyers, reducing monthly costs.
- But critics argue that instead of lowering home prices, these incentives simply mask costs — and may even inflate property prices.
- Seller Financing
- In seller financing, the home seller effectively acts like a bank: the buyer makes payments directly to the seller over time, plus interest.
- It’s appealing for buyers who don’t qualify for traditional loans and for sellers who want to extract value over time.
- But there’s risk: if interest rates don’t drop, buyers might be forced to refinance later — possibly at much higher rates.
- Regulators have historically scrutinized seller financing, citing risks of exploitation, especially in underserved communities.
Why Experts Are Skeptical
- Interest Overload: Stretching a loan to 50 years may lower monthly payments, but it dramatically increases the total interest paid.
- Slow Equity: With a longer loan term, homeowners build equity at a much slower pace.
- Housing Supply: Many economists argue that these financing tweaks don’t address the real problem: a critical housing supply shortage.
- Market Risk: Long-term loans could introduce greater financial risk into the mortgage market; lenders may charge higher rates for 50-year mortgages given their risk profile.
- Equity & Wealth: Because equity grows slowly, these mortgages may not be effective in helping homeowners build generational wealth.
Bottom Line
Trump’s mortgage proposals could ease monthly burdens in the near term — but they come with serious trade-offs. While they may help some buyers qualify for a home, they risk saddling others with decades of debt and stunted equity growth. Ultimately, experts argue that long-term affordability hinges more on increasing housing supply than on creative financing alone
