Persistent inflation continues to raise the cost of living for millions of Americans. Faced with this pressure, several ingenious financial solutions have emerged, though with a common pattern: further indebting consumers. This week, the Trump administration unveiled a proposal for a 50-year mortgage, a recent example of this trend. Bill Pulte, director of the Federal Housing Finance Agency, called it a “game-changer” in X. However, experts warn that it may not be beneficial for most Americans. The idea of ??a 50-year mortgage comes as the auto industry promotes seven-year loans for new vehicles, whose average price exceeds $50,000. Furthermore, the expansion of “buy now, pay later” (BNPL) options, both online and in brick-and-mortar stores, has normalized long-term debt even for small purchases, such as food delivery. While these tools may alleviate immediate financial anxiety, experts warn that they pose a significant risk to long-term economic stability. For example, while a 50-year mortgage would reduce monthly payments, the accumulated interest could double what you pay on a traditional 30-year mortgage, assuming the borrower lives to 50.

Risks and warnings from experts

With an average life expectancy of 80 years, most people should take out this type of mortgage before age 30 to benefit from it. Matt Schulz, chief consumer finance analyst at LendingTree, warns: "Cars depreciate rapidly, and a long-term loan can leave you owing more than your vehicle is worth. It's not a good situation for anyone."

BNPLs, while popular with young people, have also created problems. A Federal Reserve study indicates that many consumers resort to these tools because they cannot afford purchases otherwise, increasing the risk of late payments and over-indebtedness. According to the Federal Reserve Bank of New York, all major forms of debt, including mortgages, auto loans, and student loans, are at record levels. Total US household debt stands at $18.6 trillion, up 3.6% from last year, while credit card debt reached $1.2 trillion, a 6% increase from 2024. Severe delinquency is also on the rise: more than 3% of consumers are at least 90 days behind on payments,the highest level in more than a decade. For student loans, 14% have failed into severe delinquency, the highest level since the regional reserve began tracking the data in 2004. Homeownership remains a key asset. Homeownership has historically been one of the most effective ways to build wealth, thanks to property appreciation and associated tax advantages. However, with high prices and elevated mortgage rates, this decision has become increasingly complex and risky for the average American.

“Homeownership has been one of the most accessible ways for the average person to accumulate wealth,” Schulz concludes, although he cautions that, in the face of inflation and new forms of debt, buying a home has become a financial decision that requires more careful consideration.

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