Examining the U.S. Proposal for 50-Year Mortgages
On November 8, 2025, FHFA Director Bill Pulte said the Trump administration is preparing a plan to introduce a 50-year home mortgage. The premise is straightforward: extend the amortization period to make monthly payments more affordable and expand access to home ownership.
But a detailed review of this proposal by UBS suggests the benefits would be limited. Their analysis concludes that “the addition of a 50-year mortgage option would have marginal benefits for homebuyers, and those benefits are largely a function of the rate/spread calculus. Based on our analysis, moving from a 30-year to a 50-year mortgage would lead to only a small reduction in monthly payment (depending on the ultimate 30-year to 50-year spread).”
One of the major drawbacks of a 50-year mortgage is the sheer amount of interest a borrower would pay, along with the limited amount of equity built in the first 20 years. Assuming the loan is held to term, total interest costs are more than double those of a 30-year mortgage. With most early payments going to interest, only 4 per cent of the mortgage principal is paid down after 10 years, and just 11 per cent after 20.
UBS also highlights a technical concern: the spread required to hedge the duration risk of moving from a 30- to 50-year term could erase much of the benefit of extended amortization. Hedging amplifies movements in long-term interest rates, and the risk is greater for ultra-long mortgages given thin liquidity and limited participation in this area of the swap market.
Complicating matters further, the Dodd-Frank Act bars Fannie Mae and Freddie Mac from insuring mortgages longer than 30 years. Any 50-year loan would therefore be deemed “non-qualifying,” requiring legislative changes before the agencies could purchase such assets.
Another complication is the demographic: the average first-time buyer is 40 years old, meaning many may not live to see a 50-year mortgage reach maturity.
International Examples
While the proposal may hold limited value for U.S. consumers, long-term mortgages have appeared elsewhere. Two notable examples are Japan and Switzerland.
In the 1990s, Japan’s real estate industry promoted 100-year mortgage terms to encourage home ownership. The idea was to create an intergenerational product, with the home and debt passed from grandparent to grandchild. The experiment, however, did little to improve affordability. Instead, wealthy homeowners used the extended terms as an estate-planning tool to reduce inheritance taxes.
Switzerland permits a large interest-only mortgage portion that does not need to be repaid. Borrowers must make a minimum down payment of 20 per cent, with the remaining 80 per cent typically divided into two parts:
- First mortgage (approximately 65 per cent of property value): This portion generally requires no principal repayment. Borrowers pay only the interest, and the debt can be carried indefinitely — even across generations — provided affordability criteria continue to be met.
- Second mortgage (approximately 15 per cent of property value): This portion must be amortized within 15 years or by retirement age, whichever comes first.
The main benefit of an interest-only first mortgage in Switzerland is tax deductibility. Homeowners are taxed on the imputed rental value of their property, while interest and maintenance costs are tax deductible. A law passed in September 2025 will, as of 2028, remove this tax along with the deductions, except potentially for first-time buyers for a limited period. It remains to be seen whether Swiss mortgages shift more toward amortizing products once these changes take effect.
In Canada, OSFI, CMHC and the Bank of Canada have all spoken out against longer amortizations. Their concern is that extended terms increase risks, including the persistence of outstanding loan balances — keeping borrowers in debt longer — and greater risk of losses for lenders. Given the December 15, 2024, move to allow insured 30‑year amortizations for first‑time buyers and purchasers of newly built homes, further changes to the system appear unlikely.
Independent Opinion
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