Unpacking Trump’s 50-Year Mortgage Proposal

From the New York Times, I'm Michael. Bubaro. [music] This is the Daily. A few days ago, when President Trump. proposed the introduction of a 50-year. mortgage, he challenged a [music]. bedrock of the American housing market. and financial system. But above all, he. revealed just how desperate [music] he. is to lower prices for consumers and how. willing he is to embrace radical.

solutions to do so. It's [music] Monday, November 17th. Democrats had a clean sweep around the. country on Tuesday. It was a resounding. demand for relief from the rising cost. of living in an off-year election. [music]. >> In the final analysis, the message from. the elections two weeks ago in New. Jersey, Virginia, and New York was.

exceptionally clear. The country is. unaffordable. >> People's groceries bills are still high. They're still dealing with inflation. They're suffering. Focus on domestic. policy and on making people's lives. better. >> Everyone embraced that message. except. >> our energy costs are way down, our. groceries are way down, everything is. way down. >> for President Trump. >> So, uh, I don't want to hear about the. affordability because right now. >> who initially dismissed it, much to the. constrnation of his fellow Republicans,

>> the president says there's virtually no. inflation and that grocery prices are. going down. Do you agree with him on. that? >> Um, no. I go to the grocery store. myself. Grocery prices remain high. Energy prices are high. So affordability. is a problem. >> Who said that they agreed with the. American people that the president had. not done enough to bring down prices. [music]. So after a few days of denial, Trump. abruptly changed his tune. Suddenly he.

was Mr. Affordability. President Trump. accusing four of the biggest meat. packing companies of driving up US beef. prices, which. >> he ordered the Justice Department to. investigate whether meatacking companies. have conspired to inflate meat prices. >> The president now looking into it. You. could say he has beef with this. particular industry here. He lifted his. own tariffs on household products like. coffee, tomatoes, [music] and bananas.

and floated the idea of giving every. American a $2,000 check based on the. revenues from his tariff. >> I want the money to go directly to you, the people. >> He suggested lowering health care costs. by sending consumers a direct [music]. federal subsidy. and you go out and. you'll buy your own health insurance and. you'll negotiate different plans and. you'll get much better insurance and you. will be an entrepreneur for yourself. And finally, [music]. he offered a potentially game-changing.

and extremely controversial idea for. reducing [music] the price of housing. And he announced this idea in a [music]. pretty unusual way, even for Trump. So, Saturday morning, Trump posts this. picture on Truth Social. It's just a. picture and it says, "Great American. presidents.". >> Connor Dohy is a housing reporter for. the Times. >> And on the left you have Franklin D.

Roosevelt and above him it says 30-year. mortgage. And on the right you have. President Donald Trump and above him it. says 50-year mortgage. >> And when you saw that, Connor, did you. know what that meant? [clears throat]. >> Yeah. Right off the bat, you see he's. trying to come up with an idea that will. lower mortgage payments for everyone who. has a mortgage, >> right? Address affordability by making. housing more affordable. >> Yes. Making payments more affordable. >> Right. And quite importantly, this image. puts him in the pantheon of great.

presidents who radically rearrange the. US housing market. And to use that image. maybe as our road map here, let's talk. about the left side image, FDR and the. 30-year mortgage, which is the starting. point for Trump and I suspect for this. conversation. So, I suppose what we. should probably do is go to a little bit. before FDR and say what the housing. market used to be like. Okay, many fewer. Americans owned their homes and they had.

a lot of different ways for borrowing. the money to buy a home. Now, one of the. most popular models was something called. building and loan associations. Some of. your older or film buff listeners might. know that during the movie It's a. Wonderful Life, there's a fictional. company called the Bailey Brothers. Building and Loan. So, basically, they're co-ops. a bunch of people buy. into like what is essentially a pool of. money and then they can borrow from that. pool of money their shareholders in this.

pool and then they that allows them to. borrow money from it. It's a very. complicated model. It had a lot of risk. to it. >> But the point is is that it's a very. haphazard market and it's a market that. the government has essentially no. involvement in. Right? So during the. great depression obviously there's total. chaos. There's a huge run on banks. Credit is just completely pulled back in. various ways and it makes it really. really hard to buy a house. FDR is seen.

as the person who brought the government. into the housing market in a big way. After the Great Depression, government. does a bunch of different things. One is. they really try to make standard this. idea of what's called an amortizable. mortgage, which means you have one. payment and you do your principal and. interest in one easy payment. The other. thing is they start encouraging. longerterm mortgages. Now, longerterm. mortgages are going to be more. affordable because the monthly payment. is going to be much less if you can. extend it over, say, 30 years instead of.

10 years. The problem is banks don't. really want to do long mortgages. They. don't like it because if interest rates. go up, they have to pay more money to. the people who put money in their bank, but they're still getting the same. amount of money from the people who've. borrowed money for the home. So, the. government says, "Okay, well, we'll help. you with that problem by covering you if. these loans start to go belly up." Mhm. >> Now, exactly how they do this is this. very, very complicated mortgage system.

that we now have. But the whole point of. all of this is to make it easier for. more people to buy homes and for that. home to be sort of wrapped around one. easy payment. So out of the economic. calamity that was the Great Depression. comes this effort by the government to. encourage as many Americans as possible. to buy a home by ensuring that they can. do so over a very long period that makes. it more affordable with what we now.

think of as the fixed rate 30-year. mortgage. Interestingly, we can thank. the Great Depression in a sense for. that. Yeah, that system is why we have a. huge home ownership rate. About. twothirds of Americans own their home. That number would be way lower without. their 30-year fixed mortgage. And it's. just an incredible deal. >> because the interest rate is fixed, your. monthly loan payment is frozen, even if. inflation picks up. On top of that, if.

rates go way down, you can refinance, >> right? >> So, you can actually lower your rate. over time, which I did not too long ago. So you get all the benefits of a fixed. rate with none of the downsides. And. that is why we have a really high home. ownership rate. Now let's talk for a. second. Why would the government want to. make it easier for people to borrow. money? Well, the reason is if you're. borrowing money to buy an asset, a home, something that's going to hold its. value, hopefully increase in value, that's kind of different than running up.

a credit card bill to get takeout one. night, right? So the government has all. this financial plumbing created because. it wants people to buy a stable asset. It's stable for their family. It has. forced savings. >> Even if the home doesn't appreciate or. appreciates not very well, you're still. saving all that money, which you would. not be doing if you were just renting. So you're borrowing all this money to. kind of create stability. You create. people who are rooted in neighborhoods. to create an asset that people can own.

and pass to their children. You create a. form of retirement savings. >> So, why would we ever mess with the. 30-year fixed rate mortgage if from what. you're saying, it kind of works and. works pretty well? >> Yeah, homes have become much more. expensive. There are a lot of. complicated reasons for why they become. more expensive, but the way that people. see it is that mortgage payment. M. >> there's an adage in the real estate. industry that says you don't actually. buy a house, you buy a payment. People.

use that payment as their barometer for. can they or can they not achieve the. dream of becoming a homeowner. >> So this payment has gotten a lot more. expensive over the past couple years for. a whole bunch of different reasons. One. is homes just cost more. So if homes. cost more, it's going to be a higher. payment. The other is interest rates. have gone up, >> right? quite a bit from their rock. bottom level in the pandemic. And that.

is making people feel really bad because. all their friends got 2% interest rates. and now they're stuck with six. So homes. are more expensive and money is more. expensive and so that payment has gone. up quite a bit from what it was. >> Right. The 30-year fixed rate mortgage. no longer feels very affordable. >> Yes. And so if you're a politician. though and you're just looking at that. payment, you're going, "Everyone is mad. about this payment, what can I do in a. relatively short period of time that. will make that payment go down, which.

would make people feel very good.". >> Mhm. >> Well, you can do what FDR did, [laughter] which is find ways to stretch. the payment out over a much longer. period of time. >> Thus, the idea of a 50-year mortgage. Yes. So, Bill Py, who is a senior Trump. administration official, also happens to. be the grandson of William Py, who is. helped build the PY Homes homebuilding. empire.

>> Wow. >> Apparently goes to Trump and shows him. this poster, FDR on the left, 30-year. mortgage. Trump on the right, 50-year. mortgage, and Trump buys into the idea, I guess, and post it on Truth Social and. seemingly embraces it as a proposal. and. just explain how a 50-year mortgage. would work to actually lower people's. monthly housing costs. >> So, we're taking some guesses here. because the Trump administration did not. put out a thorough white paper on this, but the basic gist is the cost of the.

home would be spread out over 50 years. instead of 30 years. So, if you are. buying a $500,000 home, for instance, you're paying that purchase price over. 50 years instead of 30 years. And so the. portion of your payment that is the home. is going to be lower in each monthly. payment. So let's just say you're buying. a $500,000 house at current mortgage. rates and you put down 20%. Your payment. would go from about $2,500 for a. 30-year, right? To about $2,200.

for a 50-year. >> per month. Per month. So you'd save. about $300 per month. And just to say. $300 a month times 12 months in a year. is nearly $4,000 a year. That's real. money. >> Yeah, definitely. That's real money, babe. Imagine if you got a $4,000 raise. >> Yeah, you'd be pretty pleased. And so in. theory, what would a 50-year mortgage do. to the US market if it came into. existence and if it lowered home monthly.

payments by the amount we're talking. about? It's hard to say exactly how it. would impact the market, but it would. turn up the heat. It would make more. people want to buy. It would make more. people feel like they could buy. >> That in turn might get more people want. to list because they feel like, "Oh, well, I'm going to finally get the offer. I really wanted.". >> That in turn could get home builders to. increase the pace of new construction. because the lines are growing again. So.

it would definitely stimulate the. housing market in a great many ways. because more people can buy homes now, >> right? So you can see why this would be. an attractive option for the president. of the United States at a moment when. everyone's telling him there's a real. affordability problem in this country. and it's typified by the unaffordability. of the housing markets. You can see why. it would be tempting to post that image. and just make a 30-year mortgage. suddenly a 50-year mortgage.

>> Oh, totally. I mean, if you're a. president who wants to do anything for. affordability, coming up with a thing. that will change someone's monthly bill. is really appealing because it would. lower payments and it would lower them. in an obvious way that people could see. in their budget. And so what is the. response to this idea once Trump posts. it? That image of himself and FDR and. the concept of 50-year mortgage.

People just annihilate this idea. I. mean, they say this could make things. worse, not better. People from all. across the political spectrum converge. and say this is just an incredibly bad. idea. >> [music]. >> We'll be right back. So, Connor, why is everyone panning this.

idea? What is so wrong with the 50-year. mortgage? >> Okay, so the problem is it looks like it. saves you money. Let's return to our. example. You have the $500,000 house. with the current 6.2% mortgage rate. you. go from $2,500 to $2,200, you've saved. yourself 300 bucks, >> right? >> Okay. Now, in the first example, 30. years, you're going to end up paying.

about $500,000 in interest. You pay. basically the house in interest. Buy. $500,000 house, you pay about 500,000. interest. A lot of interest. Yeah. Okay. Now, let's go to the second example. You. take that house and you buy it over 50. years. Well, now you're going to end up. spending about $900,000 in interest. >> Wow. >> A significant amount more. So, almost a. million dollars in interest for your. $500,000 house. >> Wow. You're paying way more in interest. than you are for your house. You're.

basically buying your house twice, but. you're paying the bank for a whole other. version of your house. >> Exactly. I mean, and the reason is it's. 20 more years of paying interest. So, a. major major downside of a 50-year. mortgage is 20 extra years of forking. over interest payments to the bank. And. not only that, there's some questions. about whether or not it would even. really save you money. So, for instance, if banks are going to be doing 50-year. mortgages, the interest rate on the.

50-year mortgage is almost certainly. going to be higher than on a 30-year. mortgage. And the reason is a 50-year. mortgage is much riskier. If you're. lending someone money over 50 years. instead of 30 years, there's a much. higher chance that something will go. wrong in those 50 years. >> Mhm. >> On top of that, if you are buying that. home after 50 years, takes you a lot. longer to start owning real equity in. that home. As anybody knows, looking at. their uh mortgage statement, in the. first few years, you're you're mainly. only paying interest and in the last.

years you're mainly only paying. principal. So, it would take you 20. years to start really having significant. equity in the house, >> right? And I guess we should probably. mention the reality that if a lot of. Americans started to take out 50-year. mortgages, and we assume many people don't start. taking them out until they're in their. late 30s and early 40s, which is when a. lot of Americans now embark on home. ownership, a lot of people are not going. to make it to the end of these. mortgages. I mean, they're going to die,

right? >> Unquestionably. Now, what's really. striking about the critiques of this. idea is just how much of it is coming. from within Trump's party and some of. Trump's closest allies. You have Laura. Loomer, the conservative activist, saying lifetime mortgages. You have. Marjgerie Taylor Green, who is one of. the most strongly associated with. America first. Well, she says you'll be. in debt for life. You have Christopher. Rufo, another conservative activist, saying if you have a 15 or 30-year.

mortgage, you'll actually own your home, whereas a 50-year mortgage, you're never. going to own your home. Essentially, you're just renting it from the bank. Now, >> interesting. >> Many people from all across the. political spectrum sort of recognize. this as a very risky deal. >> So, is it fair to say that this is. probably not about to become the new. gold standard of American mortgages? >> I think it's fair to say they're going. back to the drawing board on this one. So if this idea isn't really going. anywhere at the moment, what else is. coming out of this administration that.

would potentially confront the. unaffordability of housing right now? >> So Bill Py, the Trump administration. official, said this was just one of. several ideas. Another would be portable. mortgages where you could take your. mortgage rate with you to another house. That would hopefully open up inventory. because a lot of Americans right now. have lower mortgage rates and want to. move but aren't going to because they. don't want to have to buy a new house at. a higher mortgage rate. So that might. encourage more people to move. So it. would unstick the housing market.

potentially. >> Another one would be assumable. mortgages. So that's kind of the same. idea from a different direction. If you. buy a home and the person who owns the. home has a killer low interest rate, you. might be able to assume their mortgage. and their mortgage rate, you know, when. you buy the house. So, that would. encourage someone to move, that would. encourage someone to buy, etc. >> Are any of these practical? Are they. achievable? >> Uh, probably not. Um, what you're seeing.

though is all the same type of idea, which is how do we fiddle with the debt? How do we fiddle with mortgage rates in. such a way that we can attack the. payments either by extending it with the. fifth year or essentially winding back. in time to give people access to. mortgage rates that reflect mortgage. rates of 10 years ago. >> Mhm. >> But there's one big thing we're missing. here, which is that the reason housing. is so expensive is that we have a really.

bad housing shortage in the country. We. stopped building housing essentially. stopped building housing after the great. recession and have never caught up. So. if you want to have any real impact on. affordability, you have to eventually. attack that problem. And attacking the. mortgage rate stuff, all it really does. is make it easier for more people to buy. what is basically the same number of.

homes. >> Right. It attacks a symptom by. definition. >> Exactly. And the problem with the. housing shortage is that it's takes a. long time to have any impact on and it's. not a thing that the president has a lot. of control over. There are state. regulations for how you build housing. There are local regulations for how you. build a housing. All this stuff that. just breaks your brain. The white house. doesn't have much control or even. influence over. >> Right. That's the province of governors. It's the province of mayors. >> Yeah. So around the country you are. seeing states really go after this.

supply problem. You've seen Florida, Montana, Texas, California, Oregon, Arizona, Massachusetts. All of these. states have had some kind of effort to. essentially lower their housing. regulations to make it easier to build. housing in hopes that they will inspire. home builders to go through a building. boom. But these solutions all take a. really long time and they can also be.

controversial, >> right? >> You know, in California, for instance, they just passed a law that changes. zoning. It makes it much easier to build. higher density housing in existing. neighborhoods. Well, the legislature who. passed that bill has been working on a. version of this for 10 years, and it. only passed after people fought like. crazy against it because they don't want. taller buildings in their single family. neighborhoods. Even if all these things. happen after going through all that. difficult politics, it'll still be years.

before developers get projects approved, before they start building them, before. there's enough units to impact the. supply that people would really notice. in prices. So this work is just grinding. hard work that's also kind of thankless. and it feels like the states have kind. of run out of options and so they are. doing the hard work. So let's say all. these states, California, whatever, Texas, actually have a huge impact on. the supply and actually they lower. prices for people, right? Let's say it's.

a resounding success. That resounding. success is unlikely to happen in. anyone's political lifetime. >> It's certainly not going to happen. before the 2026 midterms and it's very. unlikely to have a huge huge noticeable. impact on prices by 2028. >> Got it. From everything you're saying, the real solutions to the American. housing crisis of unaffordability right. now isn't flashy. It isn't quick. It's.

not a true social post with two. presidents on it. It's not a 50-year. mortgage. It's this very unsexy, difficult, slow, brainbreaking work of. changing the way zoning works and. stimulating local housing markets. And. it's probably not going to be coming. from the White House. >> Absolutely right. [music]. I think the federal government can be a.

huge part of this story. I think there. are lots of things the federal. government can do to help these efforts. that are happening in state and local. governments, but they're not going to be the author. of them. [music]. >> Well, Connor, thank you very much. I. appreciate it. Thank you. [music]. We'll be right back. [music].

Here's what else you need to [music]. know. One of the Republican party's most. high-profile alliances between President. Trump and Representative Marjgerie. Taylor Green of Georgia officially. imploded over the weekend. Green, [music] a once fierce Trump advocate, who backed his efforts to overturn the. 2020 election results, has infuriated. Trump [music] recently by criticizing.

his handling of the economy and the. Jeffrey Epstein investigation. As a. [music] result, Trump withdrew his. support for Green, called her a traitor, and accused her of becoming a Republican. [music]. in name only. >> What do you think happened? What do you. think is the reason for this? Unfortunately, it has all come down to. the Epstein files and that is shocking. And [music] you know, I I stand with. these women. I stand with rape victims.

and I I will not apologize for that. In. an interview on Sunday with CNN, Green. said that she still supports Trump, but. expressed [music] alarm at the ferocity. of his attacks on her over the past few. days. >> The most hurtful thing he [music] said, which is absolutely untrue, is he called. me a traitor. And [music] that is that. is so extremely wrong. And those are the. types of words used that can radicalize. people against me and [music] put my.

life in danger. Meanwhile, on Sunday night, President. Trump [music] ended his effort to stop. House Republicans, including. Representative Green, from backing a. [music] bill that would force the. administration to release all of its. files on Epstein. Trump had [music]. previously fought the measure. The bill. is expected to pass later this week. And. so by endorsing it now, Trump hopes to.

avoid a potentially major embarrassment. [music]. [music]. Today's episode was produced by Nina. Feldman, Mary Wilson, Ricky Netsky, and. Jessica [music] Chung. It was edited by. Patricia Willins and Michael Benois. contains music by [music] Dan Powell, Marian Lozano, and Diane Wong, and was. engineered by Alyssa Moxley. [music].

[music]. That's it for the Daily. I'm Michael. Boro. See you tomorrow.