30 years already seem a somewhat too long one. 40 year is even worse. Think of getting home in mid 30s. 30 years from there is mid 60s, still time when many work, but 10 years into retirement and still paying mortgage? Not to forget renovations and mandatory maintenance.
So? If it's too long, then pay it off early. If you can't then you'll understand why it was 30 years in the first place.
Housing prices will become more expensive as people tend to look at monthly costs when taking out a mortgage.
If people need a 40-year mortgage to be able to afford a house.. society needs a reboot.
its worse than that...people have to rent forever cause the downpayment is unreachable
This will however be great for existing homeowners as it will inflate the price of their house even further.
But bad for the kids of these existing home owners, because they will not be able to afford to buy a house.
That’s not their problem, that’s their kids problem. Absurd, I know, but look at public policy for the last 30 years.
I've hear someone from Amsterdam tell how they bought a house with mortgage. They expanded the mortgage with a few years. The previous owner did the same. Presumably the house and the mortgage swapped ownership together a few times already, and you were not expected to pay it fully off in your lifetime. Is this normal?
In Japan in the 1980s there were 200 year mortgages. You were not expected to stretch out the repayment over the full 200 years. The idea was that you would usually pay down more than the minimum payment, but if you were short of funds for a while you could pay the minimum until your financial situation improved. It was nearly the equivalent of an interest-only loan.
That's, essentially, a long-term lease. It's not wrong, it's just not what we normally think of as a mortgage.
I've always wondered what the economic implications of longer lifespans are. It seems like this is one of them-- imagine we have 80+ year mortgages once human life expectancy reaches 150 years.
Renting with more risks? Depending on system, if the mortgages are recourse or no-recourse... Just imagine getting one such loan in city that dies off, and being stuck with it until bankruptcy. Or large natural catastrophe or sea level rise or long term drought. Basically something outside insurance. If you even can keep insurance...