How would this impact Americans?
As housing affordability continues to be a pressing issue in post-pandemic America, a former Obama administration advisor, John Hope Bryant, is pushing for a major shift in how Americans finance their homes. In a recent op-ed for CNBC, Bryant, who is also the founder and CEO of the nonprofit Operation Hope, argued that the 40-year mortgage should replace the 30-year mortgage as the new American standard.
“As home prices soar and interest rates rise, particularly in urban areas, even 30-year mortgages can leave many families struggling with unaffordable payments,” Bryant told CNBC.
The concept of a 30-year mortgage has been deeply ingrained in American homeownership culture for decades, balancing the need for affordable monthly payments with a reasonable repayment timeline. However, Bryant suggested that the current economic climate - characterized by soaring home prices and rising interest rates - necessitates a rethink of this traditional model.
According to Bryant, a 40-year mortgage could significantly lower monthly payments by extending the repayment period, making homeownership more accessible to a broader range of people, particularly in urban areas where housing costs are most burdensome.
Adapting to modern needs
A Fortune report noted Bryant’s proposal hinged on the fact that people now are living longer than they were when the 30-year mortgage became standard during the Great Depression. With life expectancy now approaching 80 years, Bryant said that “a 40-year term aligns better with modern realities.” Extending the mortgage term would not only lower monthly payments but could also lock in more affordable market rates, thereby easing the financial burden on prospective homeowners.
“Critics may argue that a longer mortgage term increases the total interest paid, but the benefits of affordability and access outweigh this drawback,” Bryant said. “For many, the alternative is indefinite renting, which builds no equity and leaves families vulnerable to rising rents and economic displacement. A 40-year mortgage allows more people to begin building equity sooner, offering a pathway to long-term financial stability and sustained human dignity—a key element of the American Dream. A pathway up the repaired economic aspirational ladder in America.”
Moreover, Bryant emphasized that a 40-year mortgage could be a vital tool for achieving long-term financial stability and helping more Americans build equity earlier in their lives. He noted that such a mortgage could be particularly beneficial for first-time homebuyers, proposing that they be offered rates between 3.5% and 4.5% through federal subsidies, provided they complete financial literacy training. Bryant also suggested capping these subsidies at $350,000 for rural areas and $1 million for urban areas to ensure they are targeted effectively.
While some lenders already offer 40-year mortgages, they are not yet a mainstream option. To make this proposal a reality, Bryant suggested leveraging the Federal Home Loan Bank System, a government-sponsored enterprise that supports mortgage lending across the country. With its established infrastructure, Bryant said this system could effectively roll out 40-year mortgages nationwide.
What do you think of this type of mortgage? Let us know in the comments below.
