A 50-year mortgage won’t make homes affordable

For a $400,000 mortgage at a 6.5 percent interest rate, the monthly payment on a 50-year mortgage is $2,254.87 compared to $2,528.27 for a 30-year mortgage. And yet, this modest decrease in monthly payments will be offset by a dramatic increase in interest payments: from $510,177.95 on a 30-year fixed-rate mortgage to a staggering $952,920.53 on a 50-year mortgage.

The reality is that even 30 year mortgages don’t make sense and never did. A 30 year fixed rate mortgage would never be offered by private markets without government incentives. They nearly masked the fact that Americans couldn’t save and couldn’t afford housing. They went onto exacerbate the problem by making Americans primary if not so retirement investment in their home. This incentivize homeowners to value scarcity in housing as lower supply will create scarcity and drive up the price of their “investment”, but in this case, the investment is housing for others.