You have 0 free articles left this month.
Advertisement

Experts slam 50-year loans: ‘More risk, less reward’

08 DEC 2025 • By Emilie Lauer • 4 min read • Finance

As Australia prepares for another cash rate hold, experts have rejected the controversial idea of a 50-year mortgage, which would further increase property prices rather than improve affordability.

mortgage new ta

Experts and economists have predicted that while the Reserve Bank of Australia (RBA) will most likely hold rates at 3.60 per cent in the December meeting, American-style policy won’t be the solution to ease Australia’s property challenges.

Last week, US President Donald Trump announced that his government was considering a 50-year mortgage repayment plan to address the nation's housing crisis.

While the plan sparked global debate, Australian experts have rejected the idea in droves, saying the whooping five-decade mortgage could add more challenges to the housing market rather than solve it.

You’re out of free articles for this month
According to the December Finder RBA Cash Rate Survey, 4 in 5 experts said 50-year mortgages would not work in Australia, adding pressure to the property market rather than relieving it.

University of Sydney associate professor Stella Huangfu said that while having a 50-year mortgage would reduce monthly repayments, interest will be higher, and property prices will keep on increasing.

“In most cases, it actually allows people to borrow more, which pushes prices even higher.”
“Buyers end up paying far more interest over their lifetime, carrying debt for decades longer, and building equity much more slowly,” Huangfu said.
Similarly, UNSW senior lecturer Dr Nalini Prasad said that the length of the mortgage would see buyers have to service their loan into retirement, which could add further financial pressures. "It's hard to pay off a mortgage if you're retired,” Prasad said.
Under a 50-year mortgage, borrowers would have to service their loans well into their 80s or even 90s, adding financial pressure well into their retirement.

Wealth analyst Dale Gillham said extending mortgage terms would advantage lenders far more than borrowers.

 
 

“Australia has this unique love affair with property, and we need to look deeper into why this is,” Gillham said.

“Further, we need to look at what is driving prices to unrealistic levels. In the last 40 or so years, housing affordability has gone from around 4 times the average wage to over 8 times. As it stands, due to government compliance, taxes and fees, building new homes is far from affordable, and in many cases is not viable for investors.“
Gillham said Australia must address systemic issues before making loans more accessible, warning that doing otherwise would worsen the problem.
Currently, a ‘traditional’ loan term in Australia remains 30 years, with some banks exploring the option of a 40-year mortgage. Earlier this year, Great Southern Bank announced 40-year mortgages for first home buyers aged 18 to 40, reducing monthly repayments and helping them enter the property market sooner.

Experts had said that while the longer term lowers initial payments, borrowers may face higher total costs over time and were expected to refinance or make extra repayments as their financial situation changes.

Additionally, a longer mortgage could push up mortgage stress among borrowers, as no rate cuts have been definitive.

While mortgage stress among Australian homeowners has eased to its lowest level in over two years following the RBA’s August rate cut to 3.6 per cent, 25.3 per cent remain at risk as income pressures, employment challenges, and rising inflation continue to weigh on borrowers.

With tomorrow’s cash rate call looming, Australian households have been desperately seeking financial relief, with Finder’s Consumer Sentiment Tracker finding that 43 per cent of Aussies have less than $1,000 in savings.

Head of consumer research at Finder, Graham Cooke, said borrowers should take time in the holiday period to rethink their financial strategies.

“Take a hard look at where you’ve been spending your money. Stop paying for things you don’t need or aren’t using – think unused memberships and subscriptions – and don’t pay too much for what you do need – your mortgage, energy provider, etc.”

Tags:

RELATED TERMS

Mortgage
Mortgages are loans that are used to buy homes and other real estate where the property itself serves as collateral for the loan.
Risk
Risk is defined as the possibility of an investment having a different outcome from its expected gains or returns.
You need to be a member to post comments. Become a member for free today!