50-year mortgages could trap people into a lifetime of debt, an Aussie housing expert says.
A radical plan to stretch home loans out to 50 years – floated by Donald Trump in the US – has been savaged by an Australian housing expert, who claims the move would lock property buyers into a lifetime of debt if 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.
Real estate 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’re signing up to a 50-year mortgage, you’re essentially signing up to a debt trap for life,” Mr Scott said.
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Trump this week declared 50-year loans could make homes more affordable, posting on his Truth Social platform a comparison between himself and WWII-era US president Franklin Roosevelt — the president who oversaw 30-year mortgages become standard in the US.
Trump’s suggestion has attracted fierce criticism in the US, with experts warning it could explode total repayments, inflate housing bubbles, and leave generations locked into debt until their 80s or 90s.
Mr Scott said the concept would be a disaster in Australia and make a bad situation far worse if ever introduced.
He pointed out that the average owner-occupier loan already sits at nearly $680,000, according to the ABS, and that Aussies were “taking on massive debt loads”.
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US President Donald Trump has floated the idea of 50-year mortgages in the USA. Picture: Getty Images via AFP
“Stretching those loans out over half a century only compounds the problem. You end up paying hundreds of thousands more in interest.”
Mr Scott said a 50-year mortgage would prolong the toughest part of the repayment cycle: the first decade when interest payments make up the overwhelming majority of loan repayments.
This difficulty would be concealed by the seemingly cheaper month to month repayments offered by a half-century loan, Ms Scott explained.
“Ask anyone and they’ll tell you that the first decade of paying off your mortgage is the toughest,” he said. “This period typically takes the smallest amount of principal off your loan, meaning that you’re paying a lot and not really getting ahead.
“A 50-year mortgage, however you cut it, is essentially just prolonging this difficult part of the cycle.”
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The average homeowner has close to $680,000 in home loan debt.
Pressure during the home seeking process has often meant Aussie homeowners have more debt than they would like. Picture: Tim Hunter.
Mr Scott added: “Any subsequent increase in the duration of the loan term will compound the total repayment amount in a big way”.
Trump’s idea – endorsed by Federal Housing Finance Agency Director Bill Pulte, who called it a “complete game changer” – has been met with alarm from economists and housing advocates.
Critics claimed it was a short-term fix that risked creating long-term financial pain.
Critics of the 50-year mortgage idea include former banker entrepreneur Jonathan Rose, who wrote on X: “How is paying 200 per cent in interest to the banks a ‘win’ for the average American family?”
bRight Agent founder Aaron Scott (right).
CNBC journalist Ron Insana wrote: “The average age of a first-time homebuyer is now 40 years old, up from 28 in 1981. Owing on a mortgage until age 90 may not be terribly wise.”
Mr Scott suggested Aussie homeowners try to pay their loan off as quickly as possible to improve affordability, rather than dragging out the repayments.
“The quicker you can pay down your loan, the less interest you’ll pay which will put you in a much better position.”
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