HDO Answers: Will 50-Year Mortgages Boost REITs?

In our premium services, members have access to our staff to ask whatever questions that come to mind. Below is a question that was asked by a member in our live chat, and handled by our resident REIT expert Will Barton (Beyond Saving).

A subscriber asked: “50-year Mortgage! That should help our REITs, right?!”

Here’s the reality: If 50-year mortgages ever become common, they wouldn’t necessarily be a positive for mortgage REITs. They would introduce more interest rate risk, and investors would demand higher yields to justify holding them.

Right now, 30-year mortgage rates are roughly 50 basis points higher than 15-year loans. Extending to 50 years could mean another 50 basis points higher still — and that would reduce demand from both sides.

For consumers, it’s not a good deal either. On a $200,000 home, a 50-year mortgage might only lower payments by around $60 per month compared to a 30-year loan. That’s two extra decades of debt for minimal savings.

So while the idea makes for good headlines, it’s unlikely to gain traction. Such loans would be low-liquidity and poor fits for agency mREIT portfolios.

At High Dividend Opportunities, we focus on high-yield income strategies that actually work in today’s rate environment — not hypothetical products that don’t serve investors or borrowers.

Subscribers on Seeking Alpha get these insights first and full access to our portfolio moves and analysis.

What do you think — would a 50-year mortgage make sense for investors or borrowers? Comment below