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Faced with the difficulties of access to property for the American working class, many people are trying to find innovative ideas. The possibility of a forty-year mortgage is mentioned. But is this solution as advantageous as it may seem?
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– The argument is simple: it would make it possible to lower monthly payments by spreading the repayments over a longer period.
It’s a dream who becomes more and more difficult to achieve. Becoming a homeowner is like an obstacle course in the United States, says Presse Citron. High interest rates, prix records housing… For the entire American working class, buying a home is absolutely out of reach. But people are trying to find solutions and to propose new devices to help buyers to be able to buy with less difficulty.
John Hope Bryant is one of them. He is the CEO of a non-profit organization that specializes in financial education. He advocates for a deep and radical change: he proposes to extend the duration of real estate loansof their standard duration of thirty years to forty years. The argument is simple: it would make it possible to lower monthly payments by spreading the repayments over a longer period. Monthly payments would decrease of about 7% compared to a classic thirty-year loan.
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The risk of a generation of debtors?
For the defenders of this forty-year mortgage, this solution would not only be an advantage for potential buyers. The American economy could also benefit from it, in their eyes. How? Access to property, according to them, would make it possible to stimulate similar sectors : furniture, household appliances, renovation, etc. In summary, a rather circle virtuousSupporters of the measure argue that homeowners contribute more to their community and to the economic stability.
But criticism is already being heard. One of the points raised is the total cost of the credit. Indeed, even if the monthly payments are lower, what about the interest paid over the term of the loan ? On a longer loan, their amount will be higher. Will the owner really be a winner overall? Finally, the question of such a system in the long term poses a problem: would it not risk creating a form of long-term debt, a generation of debtors ? Moreover, making the market more accessible would stimulate demand without solve the lack of available housing. A more global reform of the market, little discussed, should nevertheless be part of the discussions.
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