Page 29 - BusinessWest November 24, 2025

The FHFA, with its access to valuable data and policy
tools, is in a unique position to help alleviate the issue.
Extending the term of a mortgage from 30 to 50 years
means lower monthly payments for the borrower. To put
affordability in perspective, prior to the pandemic, the
median home price in the U.S. stood at approximately
$260,000, with a 30-year fixed mortgage rate averaging
3.8% and 20% down, resulting in monthly payments near
$1,200. Currently, the median price has risen to about
$420,000, while mortgage rates have increased to around
6.4%, pushing monthly payments above $2,100.
“When the Fed raised rates to fight inflation from
2022 to 2024, mortgage costs climbed rapidly, and
higher rates reduced the number of homeowners
willing to sell or upgrade. Contrary to economic
theory, supply shrank while demand stayed high,
putting home ownership out of reach for many.”
This means the cost of purchasing a typical home
today is more than double what it was before the pan-
demic and requires significantly more cash down. The
cost has put buyers on the sidelines. But the persistent
shortage of supply has kept prices stable at historically
high levels. J.P. Morgan estimates there is a shortage of
almost 3 million homes, which could take a decade to
resolve.
The chief economist for the National Assoc. of Real-
tors, Lawrence Yun, says the “small savings” on monthly
payments for a 50-year mortgage has tradeoffs. For one
thing, building equity in one’s home, often the largest
asset to most families, would take considerably longer.
According to Yun, “it would also take almost 40 years
to pay off half the balance, meaning most borrowers
would not begin building meaningful equity until the final
decade.” Which simply reinforces the current problem
of existing homeowners not trading up because financ-
ing costs are too high. It is unlikely that someone would
use their current equity and take on a loan for another
50 years just to be able buy a nicer home at the same
monthly cost.
And what if this type of mortgage
sparks demand for homebuyers? Without
greater supply, it will undoubtedly drive up
prices, thus not solving the affordability
problem at all.
Analysts say that, to implement a
50-year mortgage, Trump would need Con-
gress to repeal the law that prohibits gov-
ernment-backed loans with terms longer
than 30 years. Some believe regulators
have the executive authority to create this
type of loan.
Jim Millstein, who served as the Trea-
sury Department’s chief restructuring
officer from 2009 to 2011, noted that “a lot of so-called
innovations occurred to make mortgages more affordable
prior to the financial crisis. It proved to be a disaster.”
Time will tell if this is a crisis in the making or the
start of a solution to the housing problem. BW
Jeffrey Liguori is executive vice president of Bradley
Foster & Sargent Inc.
“It is unlikely that
someone would
use their current
equity and take on
a loan for another
50 years just to be
able buy a nicer
home at the same
monthly cost.”
As in holidays past, we hope for the best from all that life
can offer.
We dream of things for our future and in the process
sometimes we forget to be in the present.
Now and into the New Year, let’s experience our todays, the
here and now.
Here’s to living our best selves, not only for us, but for others
as well.
Have a safe holiday and best wishes in the New Year.
1500 Main Street - Tower Square
POB 15649
Springfield, MA 01115-5649
www.stgermaininvestments.com
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