Tea at Trianon: Trump’s 50-Year Mortgage: The New Deal for the Next Century

John Wilson Croker on Marie-Antoinette

"We have followed the history of Marie Antoinette with the greatest diligence and scrupulosity. We have lived in those times. We have talked with some of her friends and some of her enemies; we have read, certainly not all, but hundreds of the libels written against her; and we have, in short, examined her life with– if we may be allowed to say so of ourselves– something of the accuracy of contemporaries, the diligence of inquirers, and the impartiality of historians, all combined; and we feel it our duty to declare, in as a solemn a manner as literature admits of, our well-matured opinion that every reproach against the morals of the queen was a gross calumny– that she was, as we have said, one of the purest of human beings."

~from History of the Guillotine by John Wilson Croker, 1844

Edmund Burke on Marie-Antoinette

"It is now sixteen or seventeen years since I saw the queen of France, then dauphiness, at Versailles; and surely there never lighted on this orb, which she hardly seemed to touch, a more delightful vision. I saw her just above the horizon, decorating and cheering the elevated sphere she had just begun to move in, glittering like a morning star full of life and splendor and joy. Oh, what a revolution....Little did I dream that I should have lived to see such disasters fall upon her, in a nation of gallant men, in a nation of men of honor and of cavaliers! I thought ten thousand swords must have leaped from their scabbards, to avenge even a look which threatened her with insult. But the age of chivalry is gone; that of sophisters, economists, and calculators has succeeded...."

~Edmund Burke, October 1790

Tuesday, November 11, 2025

Trump’s 50-Year Mortgage: The New Deal for the Next Century

From Amuse on X:

Still, the policy must be designed with safeguards. The first guardrail should be full amortization. Every 50-year mortgage should pay down principal from day one. Sweden learned that interest-only loans can turn households into perpetual tenants. Mandating minimum annual amortization protects both borrower and lender by ensuring that equity builds steadily. The second guardrail should be transparent refinancing and prepayment terms. Borrowers should have the freedom to pay faster or refinance without penalty. A family that begins with a 50-year mortgage in their twenties could refinance to a 30-year loan in their thirties or forties as income rises. The flexibility of refinancing is key to turning long-term mortgages into vehicles for upward mobility rather than permanent debt.
A third safeguard is conservative loan-to-value limits. No system should encourage 100% financing. Requiring even modest down payments, say, 5% or 10%, gives borrowers skin in the game and prevents speculative excess. Canada, which once offered 40-year mortgages, kept defaults low by combining longer terms with strict underwriting. When the market overheated, it tightened rules without abandoning innovation. America can do the same. The goal is not to subsidize risk but to calibrate opportunity.
A fourth reform concerns the structure of mortgage finance itself. The US should move toward the Danish covered bond system, replacing the inefficient and distortion-prone FHA model. Denmark funds long-term fixed-rate mortgages through mortgage banks that issue bonds matched exactly to each loan’s cash flow. This “balance principle” ensures that lenders cannot overextend themselves and that borrowers can prepay or refinance freely. There are no government guarantees for ordinary mortgages, yet Danish default rates are among the lowest in the world. Adopting such a model could reduce systemic risk, shrink taxpayer exposure, and eliminate the need for vast federal insurance schemes. In short, we could modernize our system while making it more stable.
The Danish model also fosters market discipline. Because each mortgage is tied to a tradable bond, investors directly price the risk, and borrowers benefit from transparent rates. If Trump’s administration encouraged US lenders to adopt covered bonds for 50-year loans, the market would quickly attract long-horizon investors such as pension funds and insurers. These institutions already seek stable, predictable yields across decades. A 50-year mortgage market would match their needs perfectly. It would also deepen capital markets and provide new tools for long-term savings and investment. (Read more.)