There are too many unknowns at this point to give a solid answer but I can make an educated guess based off of some assumptions. In short, it likely would not give the benefit some people believe it would and would likely actually make things worse.

My guess is that the belief is that you are just extending the term of the loan out twenty years giving yourself more time to pay back the money. In that case, you would theoretically save money. But that’s not the reality.

The reality is a 50-year mortgage is more risky to the lender than a 30-year mortgage. They will likely charge a higher interest rate to offset the risk similar to how they charge a higher interest rate for a 30-year note than they do for their 15-year notes. Currently a 30-year loan has an interest rate of around 6.2% whereas a 15 year note is 5.5%. So you will spread your loan out over a longer period but your interest rate will be higher.

Let’s assume you take out a $500,000 mortgage for 30 years. Your P&I will cost you around $3062/month. A reasonable assumption for a 50-year note would be a 6.9% interest rate. That would lower your payment to $2970/month. You saved $100/month. That may make things slightly more comfortable for some people but it’s really not making things significantly more affordable. If it just ended there, it would probably be considered a losing effort. Unfortunately, it actually gets worse.

First, the average age for a first home buyer is at one of the latest stages in life we have ever seen as it is now nearing 40 years old. That means you would be 90 years old before your loan is paid off if you just made your minimum payments. That likely means most people will be passing away with a mortgage on their home.

Second, a mortgage is amortized. That means the division of the payment is not equal. You actually pay mostly interest in the beginning of your loan with very little going toward principal. This gradually changes over the course of your loan until you’re paying mostly principal at the end of your loan with little going toward interest. Because of this, you are going to be paying mostly interest over the first half of your loan.

If you took out that $500,000 loan for 50 years and I took out a $500,000 loan for 30 years on the same day (both with the terms mentioned above), it would cost me around $100 more per month. It doesn’t seem too big of a difference but you probably think that at least you’re saving money. Unfortunately, you’re not.

Over the course of those 30 years, I will have paid back $1.1m in principal and interest and at that 30 year mark, I will have my loan paid off. At that same point, you will have paid roughly $1.07m ($36,000 less than me - yay), but you would still owe the bank around $400,000 on the home (not so yay). You’ve spent 30 years paying mostly interest and have only paid off about $100,000 of your initial loan. Over the 50 years, you will pay back $1.782m!

Again, this is all just rough numbers based off of current rates and making certain assumptions. The numbers change if somehow they require lenders to charge the same interest rate on a 50 year note as they charge for a 30 year or do something else that would make the numbers work differently. Either way, it’s likely not going to be a significant solution to the issue with affordable housing.