I do not know what world you live in, but it is clearly a privileged one. I do not know one single person who has ever paid off their mortgage early unless they sold the house, bought a new one and got another 30 year mortgage on the new house. The average American does not have extra money to apply towards principal because they are struggling just to take care of basic life necessities. The mortgage payment is most likely going to go up every single year because of rising insurance costs and tax increases. They are not going to have “extra” money for investing by taking out a predatory 50 year mortgage. They are going to have a bit more money for those basic life necessities which, by the way, are also rising in cost every single year. The 50 year mortgage is not going to help the average American. It is only going to help those who don’t need help - the banks and mortgage holders.
Meet one such person. My wife and I made extra principal payments and paid off our mortgage in 7 years. We did that by restricting spending on other things (vacations? Not unless they were cheap or paid-for trips to conferences.) The people you are talking about may have bought more house than they should and so could not make extra payments. However, the main problem is high housing costs due to insane restrictive government policies.
I'm wondering increasingly how much NYT columns are massaged before they're let out, because I really don't remember anything as far off the mark as what I've been seeing lately here.
The reason there's even discussion about a 50-year mortgage is that [excuse me, I'm shouting for the ear-trumpet] PEOPLE CAN'T AFFORD THE MONTHLY ON THE 30-YEARS BECAUSE THE PRICE OF HOUSING IS TOO DAMN HIGH NEXT TO INCOME. If they can't afford that, Peter, the few hundred they "save" is *money they need to live on*. Nondiscretionary. They are not investing that money; they're spending it on cars. Clothes. Heating. You know, living.
People also pay off mortgages because they move, not because they live in a place for even 30 years. The difference between a 30-year and a 50-year, though, is that there's greater chance of their having built some appreciable equity before they move, so that they're not just paying rent to the bank all their lives.
I understand the long-loan appeal. You wouldn't know how to live on my income, but I've got a 20-year, 2.75% loan I took out for home energy efficiency and generation: rooftop solar, more efficient replacements for my end-of-life water heater and furnace. The very low monthly made efficiency and GHG-emission reduction affordable. It pencils out because the interest rate's so low and the drop in my purchased-energy costs is appreciable (my util bill is about $40/mo on average now in a cold continental climate, around a quarter what it was before, inflation-adjusted), and I'd have had needed a loan for at least part of the new equipment anyway, so a long low-interest loan was the best deal going. I am also likely to live in this house for the entire term of the loan.
I really think that before you sit down to write your next column, you should write these things on post-its and put them on your screen:
In America,
- Half of Gen X has nothing saved for retirement. The oldest Xers are nearly 60.
- Gen Xers are already moving in with their children because they can't afford housing. Others are considering buying vans to live in as retirement housing.
- Fewer than half of all adults have enough saved to withstand three months of unemployment.
- Only half of all women have an emergency fund.
- Gen Xers have a median non-mortgage debt of around $26K, around 40% of their median annual income. Millennials have median non-mortgage debt of around $25K on lower salaries, so their load is closer to half their annual income. Most do not make enough money vs COL to chip away appreciably at that debt.
- Only about a quarter of adults are college graduates, rising to closer to half among the youngest adults.
- Only about 15% of adults have graduate degrees of any kind.
- Nearly as many, around 12%, are on SNAP, meaning they are destitute.
- There is persistent hiring, promotion, and wage discrimination against anyone who is not a white man.
When you think of America, your picture should be this: think of the Connor household in Roseanne, but then consider that they're quite well-off because despite the fact that Dan and Roseanne are only high-school graduates, they own a house, they are a two-income household, Dan owns his own trades business and no national franchise has come around to undercut him yet, none of the kids has a disability, and their non-mortgage debt levels are relatively low. In their world, college tuition is also low enough and federal fin aid high enough that it's possible the kids could go to college if they live at home. Jackie's a unionized civil servant and will have a pension. Their flyover town is suffering, but still kicking. Next to today, this is a very solid picture.
This might be fine but you are making the top 20% assumption that these dollars are going to be invested. For people for whom a $100 difference per month in mortgage payment is critical, those dollars are going to heating, repairs, or transportation. And the inability to leverage much in the way of paid principle for years will inhibit the owner's ability to do major repairs or other large project.
What Peter says is true, but he's assuming that the buyer stays in the house until the mortgage is paid off. We lost money on the first two houses we bought and sold. The housing market is fickle, and I didn't want to be in debt for 15 years, much less 50.
That's correct. Most people will sell and move within about 15 years of buying.
Where I live, which is in a place unusually dependent on Medicaid and other federal revenues, the expected federal cuts are likely to push the area into a prolonged deep recession. In the last ten years we've had a huge boom in relatively expensive housing, and are already seeing houses staying on the market and seeing their prices cut. As the federal cuts are felt I expect we'll see waves of job losses and foreclosures, with local housing price drops to match. There'll be people taking significant haircuts as they try to leave this area for places with jobs.
The only people who pay off a mortgage early tend to be those who sell their homes. But in the long run, 50 year mortgages will have have higher interest rates, and that tends to hurt the very people that they are purported to help. But lenders will make more money. Another Trump grift. He'll invest in mortgages and make a fortune.
If the fifty year mortgage does result in higher prices for existing homes, wouldn't that induce home builders to build more homes? In the real world, the relatively inelastic supply of buildable land would result in higher land values not necessarily much more housing per se. Zoning laws and regulations would have to be changed. The Squirarchy would object strenuously.
In my earlier comment, I forgot to mention a quibble regarding your point that different loan packages should be evaluated in terms of present value. While what you say is perfectly true, it should be mentioned that estimation of present value isn't necessarily easy. Present value is dependent on discount rate, which is particular to the person or entity potentially making the transactional commitment. While many types of assets and liabilities have liquid markets with observable implied discount rates, there is no observable market for the individual discount rate of a particular borrower. Any algorithm for the present value of a loan is going to require an independent input for the particular buyer's discount rate for the particular type of loan. It takes some sophistication to figure that out.
This is the obvious answer to the people who accuse you of being "sheltered" or "privileged" or "20 percent". Whatever your financial situation is, the variables and available responses you discuss are relevant, but the discount rates implied for people in different situations will be different. If you happen to be rich, you will have options that less rich people will not have. That is kind of the meaning of being rich or poor. It doesn't mean that you should analyze your economic decisions incorrectly.
Most mortgages are paid off well under 30 years (or even 15 years) -- mortgage portfolios have "duration" more like 7-10 years since most people will move or refinance in that timeframe. Hence mortgage interest rates are generally tied to 10 year Treasury rates, not longer-term rates. I'd imagine the same would be true for 50 year mortgages. As Peter mentions, monthly payments would be lower, but when supply is constrained this would just allow buyers to bid up prices. Maybe the 50 year mortgage could be offered only to first-time buyers and those who need it most on an income basis (like FHA loans)? But in the end the 50 year mortgage seems more like a gimmick when nothing is being done to address the supply shortage.
Amen! The stupidity of the arguments you object to is a little bit reminiscent of the stupidity of the arguments of some of my fellow left of center moderates that tariffs are purely taxes on American people. As you say here, true, but irrelevant.
Which in reality means you'll likely either lose your house in old age or see it fall into disrepair because you can't afford to pay the mortgage while maintaining it.
Yes that would be common. Not universal but common. The market is capable of sorting thid out tho. The disadvantages are myriad ànd judging from the reaction consumers would see them clearly. Should Fannie buy such loans? Absolutely not. But Bill Pulte is the chairman
The market is putting a gun to people's heads. They have to live somewhere, and if this is all they can actually pay monthly that's what they'll do, even though they can see clearly why it's a terrible deal. In other words, this is not a fix and nobody should pretend it is by advocating for it, or by shrugging and saying it'll sort itself all out.
Bullshit. There are a million mortgage lenders, they will all offer 30s and 20s ànd 15s because consumers want them ànd Fan ànd Fred will buy them. That business also has notoriously low barriers to entry. If Chase said “we only do 50s” new players (and existing ones) will eat their lunch.
Who do you think buys homes, anyway? The average first time buyer is 36, has a reasonably high FICO and knows how to look up an amortization table. Banks don’t run them over. They have choices
Please kiddo. I’ve listened to MFAs shocked that their NYU degrees didn’t immediately lead to Wall Street wages for far too long to take that seriously. I’m burdened with the abilities to do basic internet searches and middle school math. Conclusions are easy. This is a valueless product that would fail. I could walk you through numbers, but I’m sick and you’re ignorant so it wouldn’t be worth it. There are no stuttering masses with no alternatives who would take it. Save those for the overpriced rental market, where the solution is more supply
Sorry, I don't agree. The potential for negative equity increases significantly as home values escalate at different rates over time. One desperate to sell in year six may find that the insignificant reduction to principal will impede the owner to sell the home unless other funds would be available to make up the difference from sale proceeds and mortgage balance.
This was a significant problem int he 2006 era market for home sellers.
You’re spot on about the time value of money. Basic Finance 101 is a class many should audit just for exposure to this concept alone. I’ve never thought much about an app or plugin that allows users to compare mortgages at their present value, but I don’t recall seeing one either.
I do not know what world you live in, but it is clearly a privileged one. I do not know one single person who has ever paid off their mortgage early unless they sold the house, bought a new one and got another 30 year mortgage on the new house. The average American does not have extra money to apply towards principal because they are struggling just to take care of basic life necessities. The mortgage payment is most likely going to go up every single year because of rising insurance costs and tax increases. They are not going to have “extra” money for investing by taking out a predatory 50 year mortgage. They are going to have a bit more money for those basic life necessities which, by the way, are also rising in cost every single year. The 50 year mortgage is not going to help the average American. It is only going to help those who don’t need help - the banks and mortgage holders.
Meet one such person. My wife and I made extra principal payments and paid off our mortgage in 7 years. We did that by restricting spending on other things (vacations? Not unless they were cheap or paid-for trips to conferences.) The people you are talking about may have bought more house than they should and so could not make extra payments. However, the main problem is high housing costs due to insane restrictive government policies.
I'm wondering increasingly how much NYT columns are massaged before they're let out, because I really don't remember anything as far off the mark as what I've been seeing lately here.
The reason there's even discussion about a 50-year mortgage is that [excuse me, I'm shouting for the ear-trumpet] PEOPLE CAN'T AFFORD THE MONTHLY ON THE 30-YEARS BECAUSE THE PRICE OF HOUSING IS TOO DAMN HIGH NEXT TO INCOME. If they can't afford that, Peter, the few hundred they "save" is *money they need to live on*. Nondiscretionary. They are not investing that money; they're spending it on cars. Clothes. Heating. You know, living.
People also pay off mortgages because they move, not because they live in a place for even 30 years. The difference between a 30-year and a 50-year, though, is that there's greater chance of their having built some appreciable equity before they move, so that they're not just paying rent to the bank all their lives.
I understand the long-loan appeal. You wouldn't know how to live on my income, but I've got a 20-year, 2.75% loan I took out for home energy efficiency and generation: rooftop solar, more efficient replacements for my end-of-life water heater and furnace. The very low monthly made efficiency and GHG-emission reduction affordable. It pencils out because the interest rate's so low and the drop in my purchased-energy costs is appreciable (my util bill is about $40/mo on average now in a cold continental climate, around a quarter what it was before, inflation-adjusted), and I'd have had needed a loan for at least part of the new equipment anyway, so a long low-interest loan was the best deal going. I am also likely to live in this house for the entire term of the loan.
I really think that before you sit down to write your next column, you should write these things on post-its and put them on your screen:
In America,
- Half of Gen X has nothing saved for retirement. The oldest Xers are nearly 60.
- Gen Xers are already moving in with their children because they can't afford housing. Others are considering buying vans to live in as retirement housing.
- Fewer than half of all adults have enough saved to withstand three months of unemployment.
- Only half of all women have an emergency fund.
- Gen Xers have a median non-mortgage debt of around $26K, around 40% of their median annual income. Millennials have median non-mortgage debt of around $25K on lower salaries, so their load is closer to half their annual income. Most do not make enough money vs COL to chip away appreciably at that debt.
- Only about a quarter of adults are college graduates, rising to closer to half among the youngest adults.
- Only about 15% of adults have graduate degrees of any kind.
- Nearly as many, around 12%, are on SNAP, meaning they are destitute.
- There is persistent hiring, promotion, and wage discrimination against anyone who is not a white man.
When you think of America, your picture should be this: think of the Connor household in Roseanne, but then consider that they're quite well-off because despite the fact that Dan and Roseanne are only high-school graduates, they own a house, they are a two-income household, Dan owns his own trades business and no national franchise has come around to undercut him yet, none of the kids has a disability, and their non-mortgage debt levels are relatively low. In their world, college tuition is also low enough and federal fin aid high enough that it's possible the kids could go to college if they live at home. Jackie's a unionized civil servant and will have a pension. Their flyover town is suffering, but still kicking. Next to today, this is a very solid picture.
This might be fine but you are making the top 20% assumption that these dollars are going to be invested. For people for whom a $100 difference per month in mortgage payment is critical, those dollars are going to heating, repairs, or transportation. And the inability to leverage much in the way of paid principle for years will inhibit the owner's ability to do major repairs or other large project.
What Peter says is true, but he's assuming that the buyer stays in the house until the mortgage is paid off. We lost money on the first two houses we bought and sold. The housing market is fickle, and I didn't want to be in debt for 15 years, much less 50.
That's correct. Most people will sell and move within about 15 years of buying.
Where I live, which is in a place unusually dependent on Medicaid and other federal revenues, the expected federal cuts are likely to push the area into a prolonged deep recession. In the last ten years we've had a huge boom in relatively expensive housing, and are already seeing houses staying on the market and seeing their prices cut. As the federal cuts are felt I expect we'll see waves of job losses and foreclosures, with local housing price drops to match. There'll be people taking significant haircuts as they try to leave this area for places with jobs.
The only people who pay off a mortgage early tend to be those who sell their homes. But in the long run, 50 year mortgages will have have higher interest rates, and that tends to hurt the very people that they are purported to help. But lenders will make more money. Another Trump grift. He'll invest in mortgages and make a fortune.
If the fifty year mortgage does result in higher prices for existing homes, wouldn't that induce home builders to build more homes? In the real world, the relatively inelastic supply of buildable land would result in higher land values not necessarily much more housing per se. Zoning laws and regulations would have to be changed. The Squirarchy would object strenuously.
Off-topic, but https://www.nytimes.com/2025/11/12/us/politics/epstein-larry-summers.html
This crowd, man. I could not be happier that my kid said no to economics.
I think what you said makes sense in a rational market, but housing is not a functioning market. I think you bring up good points about the time value of money, but miss the distortional effect of more capital in the housing market. My take is here https://open.substack.com/pub/charleswu/p/here-we-go-again-ceb?r=y241&utm_medium=ios
In my earlier comment, I forgot to mention a quibble regarding your point that different loan packages should be evaluated in terms of present value. While what you say is perfectly true, it should be mentioned that estimation of present value isn't necessarily easy. Present value is dependent on discount rate, which is particular to the person or entity potentially making the transactional commitment. While many types of assets and liabilities have liquid markets with observable implied discount rates, there is no observable market for the individual discount rate of a particular borrower. Any algorithm for the present value of a loan is going to require an independent input for the particular buyer's discount rate for the particular type of loan. It takes some sophistication to figure that out.
This is the obvious answer to the people who accuse you of being "sheltered" or "privileged" or "20 percent". Whatever your financial situation is, the variables and available responses you discuss are relevant, but the discount rates implied for people in different situations will be different. If you happen to be rich, you will have options that less rich people will not have. That is kind of the meaning of being rich or poor. It doesn't mean that you should analyze your economic decisions incorrectly.
Most mortgages are paid off well under 30 years (or even 15 years) -- mortgage portfolios have "duration" more like 7-10 years since most people will move or refinance in that timeframe. Hence mortgage interest rates are generally tied to 10 year Treasury rates, not longer-term rates. I'd imagine the same would be true for 50 year mortgages. As Peter mentions, monthly payments would be lower, but when supply is constrained this would just allow buyers to bid up prices. Maybe the 50 year mortgage could be offered only to first-time buyers and those who need it most on an income basis (like FHA loans)? But in the end the 50 year mortgage seems more like a gimmick when nothing is being done to address the supply shortage.
Amen! The stupidity of the arguments you object to is a little bit reminiscent of the stupidity of the arguments of some of my fellow left of center moderates that tariffs are purely taxes on American people. As you say here, true, but irrelevant.
The real bonus isn’t paying twice as much interest. It’s making mortgage payments until you’re nearly 90.
Which in reality means you'll likely either lose your house in old age or see it fall into disrepair because you can't afford to pay the mortgage while maintaining it.
Yes that would be common. Not universal but common. The market is capable of sorting thid out tho. The disadvantages are myriad ànd judging from the reaction consumers would see them clearly. Should Fannie buy such loans? Absolutely not. But Bill Pulte is the chairman
"The market is capable of sorting thid out tho"
The market is putting a gun to people's heads. They have to live somewhere, and if this is all they can actually pay monthly that's what they'll do, even though they can see clearly why it's a terrible deal. In other words, this is not a fix and nobody should pretend it is by advocating for it, or by shrugging and saying it'll sort itself all out.
Bullshit. There are a million mortgage lenders, they will all offer 30s and 20s ànd 15s because consumers want them ànd Fan ànd Fred will buy them. That business also has notoriously low barriers to entry. If Chase said “we only do 50s” new players (and existing ones) will eat their lunch.
Who do you think buys homes, anyway? The average first time buyer is 36, has a reasonably high FICO and knows how to look up an amortization table. Banks don’t run them over. They have choices
You lead a very sheltered life.
Please kiddo. I’ve listened to MFAs shocked that their NYU degrees didn’t immediately lead to Wall Street wages for far too long to take that seriously. I’m burdened with the abilities to do basic internet searches and middle school math. Conclusions are easy. This is a valueless product that would fail. I could walk you through numbers, but I’m sick and you’re ignorant so it wouldn’t be worth it. There are no stuttering masses with no alternatives who would take it. Save those for the overpriced rental market, where the solution is more supply
This article isn't wrong per se, but it assumes responsible, not predatory underwriting, and a financially literate borrower.
With plenty of disposable income, free to choose between 50-year and 30-year.
Sorry, I don't agree. The potential for negative equity increases significantly as home values escalate at different rates over time. One desperate to sell in year six may find that the insignificant reduction to principal will impede the owner to sell the home unless other funds would be available to make up the difference from sale proceeds and mortgage balance.
This was a significant problem int he 2006 era market for home sellers.
Good breakdown Peter.
Only for wealthy people.
You’re spot on about the time value of money. Basic Finance 101 is a class many should audit just for exposure to this concept alone. I’ve never thought much about an app or plugin that allows users to compare mortgages at their present value, but I don’t recall seeing one either.