President Donald Trump‘s proposal to introduce 50-year mortgages could pose significant financial risks for both homeowners and lenders, according to Mark Zandi, the chief economist at Moody’s Analytics.

Longer Terms, Higher Financial Risks

In an interview with Newsweek, Zandi pointed out that borrowers opting for a five-decade loan would struggle to accumulate equity, with most payments in the initial decade going toward interest rather than principal.

He said that this could leave homeowners with minimal financial cushion in the event of a housing price drop or unexpected expenses, increasing the risk of loan default.

Due to these heightened risks, Zandi suggested that interest rates for 50-year mortgages would be “significantly higher” than those for standard 30-year mortgages, negating the potential cost savings ...