Hidden pitfall for Australians in Trump’s 50-year mortgage proposal – realestate.com.au

A radical plan to extend home loans to 50 years – launched by Donald Trump in the US – has been blasted by an Australian housing expert, who claims the move would lock property buyers into a lifetime of debt if it were ever introduced Down Under.

The controversial proposal, championed by the US president as a way to make American housing more affordable, has sparked global debate.

Property expert Aaron Scott, co-founder of bRight Agent, said any move to adopt ultra-long home loans in Australia would be a disaster for borrowers.

“If you take out a mortgage with a 50-year term, you are essentially signing up for a lifelong debt trap,” says Scott.

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Trump declared this week that 50-year loans could make homes more affordable, posting on his Truth Social platform a comparison between himself and World War II US President Franklin Roosevelt – the president who oversaw 30-year mortgages becoming standard in the US.

Trump’s suggestion has sparked fierce criticism in the US, with experts warning it could explode overall repayments, inflate housing bubbles and leave generations in debt into their 80s or 90s.

Mr Scott said the concept would be a disaster in Australia and make a bad situation much worse if it were ever introduced.

He pointed out that the average loan for an owner-occupier is already almost $680,000, according to the ABS, and that Aussies are “taking on huge debt loads”.

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US President Donald Trump has floated the idea of ​​50-year mortgages in the US. Photo: Getty Images via AFP

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“If you extend those loans over half a century, the problem will only get worse. You end up paying hundreds of thousands in extra interest.”

Mr Scott said a 50-year mortgage would extend the toughest part of the repayment cycle: the first decade when interest payments make up the vast majority of loan repayments.

This difficulty would be hidden by the apparently cheaper monthly repayments offered by a half-century loan, Ms. Scott explained.

“Ask anyone and they will tell you that the first decade of paying off your mortgage is the hardest,” he said. “This period typically takes the smallest principal amount off your loan, meaning you’re paying a lot and not really getting ahead.

“A 50-year mortgage, no matter how you arrange it, essentially just extends this difficult part of the cycle.”

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The average homeowner has a mortgage debt of almost €680,000.

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The pressure of looking for a home has often left Australian homeowners with more debt than they would like. Photo: Tim Hunter.

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Mr Scott added: “Any subsequent extensions to the loan term will significantly increase the total repayment amount.”

Trump’s idea — endorsed by Bill Pulte, director of the Federal Housing Finance Agency, who called it a “complete game changer” — has raised concerns among economists and housing advocates.

Critics claimed it was a short-term solution that risked causing long-term financial pain.

Critics of the idea of ​​a fifty-year mortgage include former banker-entrepreneur Jonathan Rose, who wrote on X: “How can paying 200 percent interest to the banks be a ‘win’ for the average American family?”

bRight Agent founder Aaron Scott (right).

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CNBC journalist Ron Insana wrote, “The average age of a first-time homebuyer is now 40, up from 28 in 1981. It may not be very wise to take out a mortgage until age 90.”

Mr Scott suggested Australian homeowners should try to pay off their loans as quickly as possible to improve affordability, rather than delaying repayments.

“The faster you can pay off your loan, the less interest you will pay, putting you in a much better position.”