Short answer: as a stand-alone housing-affordability policy, U.S. government support for a 50-year mortgage is a bad idea. It lowers monthly payments but would likely bid up prices in supply-constrained metros, slow equity buildup, worsen “mortgage rate lock-in,” and push more interest-rate and some credit risk onto taxpayers—while doing little to expand supply. An economist would frame it as mainly shifting who bears risk and how demand capitalizes into prices.

How an economist would analyze it
1) Household finance math
Payment vs. total cost: on a $400,000 loan at 6.5%, a 30-year payment is ≈$2,528; a 50-year is ≈$2,255. That’s ~11% lower per month, but lifetime interest jumps from ≈$510k to ≈$953k. After 10 years, principal paid down is ≈$61k (30-yr) versus ≈$15k (50-yr). Slower amortization lengthens the period of low equity and raises the chance of negative equity after a downturn.
Why negative equity matters: default risk rises sharply when borrowers are underwater. Federal Reserve Bank of Boston
2) General-equilibrium price effects
When credit becomes easier, much of the benefit capitalizes into higher house prices where supply is inelastic (tight zoning or physical constraints). Evidence from U.S. data shows easier mortgage credit pushes up prices most in low-elasticity metros. A 50-year term is a pure “affordability via payments” loosening, so expect price capitalization rather than large gains in ownership. NBER+2OUP Academic+2
This interacts with monetary policy: house prices respond quickly to long-rate surprises. Making payments less sensitive to rates via ultra-long amortization can dull policy transmission while still lifting demand when rates fall. Federal Reserve Bank of San Francisco
3) Market design and financial-stability channels
U.S. mortgage finance depends on TBA-eligible 10/15/20/30-year UMBS. A 50-year product is non-standard, likely non-TBA, and would fragment liquidity unless the rulebook changed—raising secondary-market spreads for taxpayers to absorb if the product is government-backed. Fannie Mae+1
Ginnie Mae only recently created a special pool for modified 40-year loans, underscoring how unusual even 40-year terms are today. Moving to 50 years would be a much bigger market-structure departure. Ginnie Mae
Longer amortization increases extension risk for MBS when rates rise (slower prepayments), amplifying negative-convexity hedging episo...

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