Impacts of a 50-year Mortgage for Homebuyers
President Donald Trump has mentioned a new plan to develop a 50-year mortgage that officials say could expand access to homeownership, though some experts are worried that longer-term mortgages could hamstring homebuyers. LiveNOW’s Andy Mac is learning more about how the proposal could impact homebuyers with Jason Mitchell, a real estate broker and the founder of the Jason Mitchell Group.
Trump’s Proposal
President Donald Trump on Thursday said he’s “not a huge fan” of a proposal that would allow prospective homebuyers to withdraw from their 401(k) retirement accounts for a down payment.
“I’m not a huge fan,” Trump told reporters on Air Force One while preparing to return from his trip to the World Economic Forum in Davos, Switzerland. “Other people like it. They’re talking about taking money out to put a deposit down on a home.
“One of the reasons I don’t like it is that their 401(k)s are doing so well. You know, 401(k)s are up 80%-90% in some cases,” the president said. “The housing market is good, but the 401(k)s are doing much better than the housing market.
“I like keeping their 401(k)s in great shape,” Trump added. “I’m not a huge fan of putting down a deposit, I’m not. I’m so happy with the way 401(k)s are doing. We’ve got people telling me they’re up 88% and over the period of a year, a full year. It’s going to be, I mean, it’s going to be close to 100%.”
Background of the Proposal
Trump’s comments come after the administration previewed the 401(k) down payment proposal last week as part of a broader push by the White House to improve the affordability of homeownership.
National Economic Council Director Kevin Hassett told FOX Business’ Maria Bartiromo last week that the “typical monthly payment about doubled for an ordinary family buying an ordinary home. And the down payment they needed to buy a home went from about $15,000, to about $32,000. And, so, there’s a real lot of room to make up.”
The Trump administration discussed a plan that would allow 401(k) withdrawals for home down payments. (iStock/Getty Images)
Details of the Proposal
Hassett went on to say that “we’re going to allow people to take money out of their 401(k)s and use that for a down payment,” adding that the proposal would be unveiled during the president’s trip to Davos.
During his address to the World Economic Forum, the president didn’t mention the 401(k) down payment proposal and instead focused on other aspects of his affordability agenda.
Trump discussed his call for Congress to set a 10% cap on credit card interest rates for one year and cited rising credit card debt as a challenge to Americans trying to save for a down payment.
The president also discussed his plan to restrict institutional investors from buying homes, which he blamed for pushing housing prices higher and said is “just not fair to the public.”
Criticism of the Proposal
Trump’s proposed credit card interest rate cap has drawn pushback from the financial services industry, which has warned that a cap on interest rates would restrict consumers’ access to credit and cause many existing cardholders to either lose their cards or see rewards and perks eliminated.
Investors have also critiqued the president’s plan to block firms from purchasing single-family homes.
They note that it would likely push prices even higher as the policy wouldn’t expand the supply of housing and that corporate investment has helped with the construction of new homes and broadening the supply available on the market.
Conclusion
The proposal to develop a 50-year mortgage and allow 401(k) withdrawals for home down payments has sparked a debate about the potential impact on homeownership and the economy. While some experts believe it could expand access to homeownership, others are worried about the potential risks and consequences. As the proposal continues to be discussed and refined, it is essential to consider the potential effects on homebuyers, the housing market, and the economy as a whole.
Frequently Asked Questions
Q: What is the proposed 50-year mortgage plan?
A: The proposed 50-year mortgage plan is a new plan to develop a 50-year mortgage that officials say could expand access to homeownership.
Q: What is the 401(k) down payment proposal?
A: The 401(k) down payment proposal is a plan that would allow prospective homebuyers to withdraw from their 401(k) retirement accounts for a down payment.
Q: Why is President Trump not a fan of the 401(k) down payment proposal?
A: President Trump is not a fan of the 401(k) down payment proposal because he believes that 401(k)s are doing well and he wants to keep them in great shape.
Q: What is the potential impact of the proposal on the housing market?
A: The potential impact of the proposal on the housing market is still being debated, but some experts believe it could expand access to homeownership, while others are worried about the potential risks and consequences.
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