The homebuying industry was jolted a week ago when a President Donald Trump social media post claimed a 50-year mortgage could be a game-changer for the housing market.

Of course, no other details were announced. Still, the real estate industry’s online community overwhelmingly thought this was a bad idea for house hunters, suggesting the two decades of added borrowing compared with the traditional 30-year mortgage would make modest savings not worth the effort.

Sadly, too many discussions surrounding homebuying challenges lean on assumptions created in a financial era that may never return. Fresh thinking is welcome to me, and I hope new ideas emerge from the debate about how to put financially strapped home seekers in a buying mood.

A top concern from the weekend’s online chatter about a 50-year mortgage is the potential delay in owning a home mortgage-free.

First of all, very few borrowers hold a 30-year mortgage for its full term. Refinancing or other early payoffs — often through a sale — end the mortgage. There’s no reason a 50-year loan would act differently. So, why shouldn’t a buyer grab a few years of savings?

Additionally, consider the current state of ridiculously elevated home prices. Barring a sharp decline in values, paying off the mortgage may no longer be a realistic goal for the typical homebuyer.

Plus, one shouldn’t quickly dismiss savings of “just a few hundred bucks” a month. That’s real money to new homeowners who likely spent almost their last penny to close the purchase.

The numbers

Yes, we have to do some math to show why a 50-year loan is not the worst idea ever.

My trusty spreadsheet examined the costs of a $500,000 mortgage on a 30-year loan at a 6.25% rate, as well as two variations on a 50-year loan: one at the same rate and another scenario with a rate that’s half a point higher, at 6.75%. Some real estate gurus suggest a 50-year loan would carry a significantly higher rate — though I’m not convinced.The 30-year loan would cost $3,079 a month. At the same rate, a 50-year term would cost $2,725 — saving $374 a month, or an 11% discount. At the higher rate, it’d be $2,913 a month — saving $165 a month, or 5%.

Now with the 30-year loan, if held for those three decades, it’s obviously paid off. But the 50-year deals? $373,000 is still owed at 6.25% after 30 years. It’s $383,000 at 6.75%.

To many folks, that remaining balance is a problem. What is forgotten, however, are the monthly savings generated by the 50-year loan’s lower monthly costs.

At 6.25%, the 50-year-old loan’s $354 a month savings add up to $127,000 over 30 years. That could be $202,000 if invested in a 3% savings account or $698,000 if invested in the stock market, assuming a 10% annual return. These earnings, depending on investment earnings, could help pay down or pay off the mortgage at that point.

This potential nest egg is smaller when eyeballing the 50-year loan with a 6.75% rate. The $165-a-month saved adds up to $60,000 over 30 years, or $94,000 if invested at 10%, or $327,000, assuming 10% annual stock returns.

The dark side

Look, the 50-year mortgage is no panacea for affordability. It might work for a special kind of thrifty buyer.

Fixing housing affordability takes some unorthodox thinking. A 50-year mortgage, if used wisely, could be one tool in housing’s repair kit.

The big question is what most house hunters do with the potential upfront savings. What if the smaller monthly payments are not being saved?

That cash might be used to spend more on the house. A 50-year loan can give a borrower 13% more buying power vs. a comparably priced 30-year mortgage.

This is a risk associated with any financial incentive to house hunters. These deals may benefit a few buyers, but they are likely also to drive up housing costs for all.

What’s the rate?

Nobody knows what rates might be on a 50-year mortgage, which is key to determining whether a borrower should use the option.

But there are plenty of guesses.

Numerous housing gurus claim the interest rate on these half-century loans would be significantly higher than the traditional 30-year mortgage.

This logic is largely based on the fact that 30-year mortgages are more expensive than the already available but lesser-used twist, the 15-year home loan. Since 1991, the 30-year mortgage has averaged 5.83%, according to Freddie Mac, compared with 5.25% for the 15-year mortgage.

But is extrapolating that gap, which varies based on the state of the economy, to a 50-year loan appropriate?

The bond market, which sets many borrowing rates, is a complex entity. Bond investors must balance the long-term risks, notably inflation, against the opportunity to secure a financially attractive yield for an extended period.

Therefore, interest rates don’t always increase in proportion to the maturity of a debt, especially when it comes to extremely long-term borrowings. And yields of mortgage bonds — which set home loan rates — are even more complicated as investors must weigh the risk of borrowers refinancing the loans that back the mortgage bonds.

Other worlds

Consider how rates fluctuate with longer maturities in other segments of the bond market.

A 2021 study by the Federal Reserve Bank of San Francisco pondered whether the U.S. government should issue 50-year bonds instead of its current 30-year maximum. The study suggests that the interest rate on the longer-term debt would be only slightly higher than that on the 30-year obligation, by no more than 0.2 percentage points.

Taxpayers might grumble that no 50-year bonds were issued despite a market where long-term yields were well below 3%.

In the corporate debt world, contemplate the yield difference between 30-year bonds and their 50-year peers. It appears modest, with an average increase of only 0.12 percentage points, using an index from the U.S. Treasury that dates back to 1984. That is far smaller than the average 0.3 gap between the 30-year corporate yield and 15-year bonds.

Coke vs. Pepsi

Ponder this curious real-world example from the corporate bond market.

Coca-Cola Corp. has an outstanding 100-year bond, due in 68 years. Traders were offering these bonds for resale on Thursday at prices equal to a yield of 5.3%. However, on rival PepsiCo’s 30-year bond, due in 24 years, traders are seeking pricing equivalent to a 5.4% yield.

In this case, involving companies with similar A-plus credit ratings, the higher rate is on the shorter-term debt.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com