Last week, William Pulte, the director of the Federal Housing Finance Agency, raised the prospect of a 50-year mortgage with President Trump, who endorsed it with a post on Truth Social. Evidently, the idea was not sufficiently reviewed by administration officials, and a firestorm ensued, after which Trump moderated his enthusiasm. A 50-year mortgage sounds like a creative way to increase home ownership, widely viewed as a means to a stable society, with homeowners committed to maintaining the integrity of their neighborhoods. Of late, the unaffordability of housing has become a strategic domestic issue, contributing to the ascent of Zohran Mamdani, recently elected mayor of New York, with the help of phalanxes of young people who cannot afford the city. A 50-year mortgage would stimulate the demand for housing and help the construction industry. (RELATED: 50-Year Home Loan the Worst Idea Since New Coke) The Wall Street Journal’s lead editorial last Wednesday advised that due to inflation and high mortgage rates, the average monthly payment has increased by about 80 percent over the past five years. Not only that, the Journal reports that the median age of initial home buyers has hit 40, versus the late 20s about 40 years ago. The only trouble is that a 50-year mortgage is a financial narcotic that will encourage irresponsible behavior and increase system risk. The only trouble is that a 50-year mortgage is a financial narcotic that will encourage irresponsible behavior and increase system risk. With total household debt at a record $18.6 trillion according to the Federal Reserve, and U.S. national debt at $38 trillion, or almost 120 percent of GDP, which is at the high end of the G7, the last thing the U.S. needs is another means to encourage indebtedness. Besides increasing system risk, there are various other negatives associated with a 50-year mortgage. (RELATED: The Forces Fueling America’s 45-Year Debt Addiction) First, it certainly appeals to a “get something more for less” mentality and can encourage people to commit to a larger housing acquisition in view of lower monthly payments. Assuming a $500,000 purchase price, 75 percent loan to value, and a 6.25 percent interest rate, the monthly payment is $2,309 for a 30-year mortgage, versus $2,044 for a 50-year one. The difference in total payments of principal and interest is almost $400,000. Given the term of 50 years, a borrower would be in debt for most or all of their adult life in a current or future home — like an indentured laborer. Second, the risk of default is greater over 50 years than 30, and this would increase long-term mortgage rates, which are already prohibitively high for many people at over 6 percent.  Further, a 50-year term generally exceeds the depreciation schedule of a residential property, which the IRS allows to be 27.5 years. (One cannot depreciate a personal residence). With a 50-year mortgage, a borrower would increase equity at a much lower rate than with a 30-year mortgage. Should a recession occur, which is inevitable, home equity loans would not raise as much “rescue” financing against that equity. Third, should the threat of insolvency arise, a borrower would have less incentive to maintain the loan as current, and it would be easier to “walk” and let a bank take it into its real estate owned (REO) portfolio. This phenomenon occurred during the mortgage meltdown of 2008, encouraged by nonrecourse laws in states such as California, Minnesota, Texas, and Connecticut. Fourth, a lower monthly payment can cause weaker borrowers to qualify, driving up home prices. Origination of subprime mortgage credits that were securitized, highly rated by credit agencies, and sold as elaborate derivatives to investors all over the world contributed to the 2008 financial crisis that imperiled Wall Street and Main Street. Fifth, frequently, mortgages are bundled and transformed into mortgage-backed securities, guaranteed by Freddie Mac or Fanny Mae, government-sponsored enterprises, and sold to investors wanting long-term assets yielding more than treasuries. Securities prices and interest rates are inversely proportional, and duration is a measurement of sensitivity to interest rates. Fifty-year mortgage-backed securities, therefore, constitute a high degree of interest rate risk. Market acceptability and liquidity should not be assumed, and since they are backed by Freddie and Fanny, they increase the liabilities of the federal government. Proposals such as this should be well vetted by the Treasury Department, Congressional committees, and regulators before making it to the Oval Office. It was Karl Marx who gave us the expression, “the opium of the people.” Today, he would likely include a 50-year mortgage. It’s not just a bad idea — it’s a lousy idea. READ MORE from Frank Schell: The GENIUS Act: Is It Greed or Is It Good? Trump and Modi Need The Art of the Deal The Next James Bond Will Defy Traditions Frank Schell is a business strategy consultant and former senior vice president of the First National Bank of Chicago. He was a Lecturer at the Harris School of Public Policy, University of Chicago, and is a contributor of opinion pieces to various journals.