Afford Anything Podcast — Should You Ever Get a 50-Year Mortgage? (w/ Dr. Karsten Jeske)

Host: Paula Pant
Guest: Dr. Karsten Jeske (Former Fed Economist, EarlyRetirementNow.com)
Release Date: December 10, 2025

Overview

This episode launches with an intended debate—should anyone ever take out a 50-year mortgage? Host Paula Pant staunchly argues against the idea for owner-occupiers, while guest Dr. Karsten Jeske offers a nuanced (though not entirely positive) perspective. What unfolds is a rich, technical exploration of mortgage duration, term premiums, equity-building, behavioral finance, and housing policy. Listeners are treated to deep dives into the math and macroeconomics underlying ultra-long mortgages, with practical and philosophical impacts considered for buyers, investors, lenders, and society at large.

Key Discussion Points & Insights

1. Stances: 50-Year Mortgage — Good or Bad?

• Paula's Position: If you need a 50-year mortgage, you simply can't afford the house (02:26).
• Karsten's Nuanced Take: The 50-year mortgage is "not as bad as people want to make it"—it can make sense for sophisticated investors, but is risky for stretched buyers (02:17-03:34).

Notable Quote:

"If you are so borderline that you don't qualify for the 30-year mortgage, 50 is the only you can afford—probably it could go sideways, right?"
— Karsten Jeske (03:34)

2. Investor Perspective vs. Owner-Occupant

• Rental Investors: 50-year mortgages might expand their leveraging capacity (03:32).
• Owner-Occupiers: Debate focuses on why an ultra-long mortgage is rarely a good idea.

3. Equity Building: The Numbers

• Paula: Biggest criticism is slow equity growth, crucial for next-home purchases (06:44).
• Karsten: Most equity comes from home appreciation, not just principal paydown. For a $500k mortgage:
  • After 10 years:
    • 30-year = $80k equity
    • 50-year = $20k equity
    • BUT, after adjusting for inflation and appreciation, the difference isn’t as dramatic (07:46-11:14).

Notable Exchange:

"So that is a 4x difference, right?"
— Paula Pant (11:14)
"It's a 4x difference... but you could also make the point that, well, the mortgage balance inflation has chipped away."
— Karsten Jeske (11:17)

4. Interest Rate Environment: Timing Matters

• Karsten: Now may NOT be the right time for 50-year loans (rates are high, investment opportunities are tight), but at low rates with strong investments, a 50-year loan could work (12:25-14:23, 18:51-19:11).

"Just because now is not the right time doesn't mean that 50-year mortgage is always bad...all I'm saying is don't throw out the baby with the bathwater."
— Karsten Jeske (14:21)

5. Term Premiums & Mortgage Mathematics

• Term Premium: The extra interest for taking the loan out longer.
• 15 vs. 30-year: About a 0.5% spread;
• 30 vs. 50-year: Not linear; a 0.25% spread may be accurate, but if much higher, the math breaks for borrowers (24:44-25:15).

"If you plug in something like a 75 or 100 basis point premium, it would create an infinite internal rate of return. So obviously lenders would like that...but that's not going to happen."
— Karsten Jeske (25:14)

• Mortgage pricing is heavily affected by duration (interest sensitivity) and convexity (asymmetric risk due to prepayment).

6. Prepayment & Lender Risk

• Lenders carry risk from borrowers refinancing when rates drop, but hold risk when rates rise (convexity/"heads I win, tails you lose") (31:05-34:29).
• Longer mortgages increase lender risk only modestly: duration goes from ~11 (30-year) to ~14 (50-year) (35:03).

"If you increase the mortgage... it doesn't mean that a 50-year mortgage... has to be 67% higher risk. It's actually, it's only 25% more risk for...interest rate fluctuations."
— Karsten Jeske (35:28)

7. Paying "Too Much" Interest? Misconceptions Debunked

• Paying more interest on a 50-year loan isn’t inherently "bad"—the time value of money and inflation mean up-front comparisons are misleading (44:17-48:51).
• Net present value (NPV) analyses should guide decisions, not raw sums.

"There's nothing offensive or abusive about paying more in interest."
— Karsten Jeske (44:47)

8. Retirement, Mobility, & Mortgages in Later Life

• Few people hold a single mortgage to term due to moving/refinancing.
• Most equity at sale comes from appreciation, not principal payments.
• Downsizing in retirement isn’t always viable due to appreciating prices everywhere (53:52-57:41).

9. Impact on Heirs & Legacy

• 50-year mortgages may lead to lower equity for heirs, but inheritance often includes assets beyond the house, and "leaving debt to heirs" is overstated if home value persists (57:41-59:55).

"It's not about settling your heirs with debt. It just means that you have a little bit less equity."
— Karsten Jeske (57:53)

10. Societal Impacts: Housing Policy & Inflation

• Consensus: 50-year mortgages without supply-side reforms (e.g., construction, zoning changes) risk only spurring prices higher—helping existing owners, not buyers (59:59-62:24).

"It is a demand side solution to a supply side problem that will...only drive prices up."
— Paula Pant (66:00)

• Underwriting should ensure 50-year mortgages are for well-qualified buyers to avoid a 2008-style crisis.

Memorable Moments & Quotes

• On US Treasuries:
  "We should have done this in the late 2010s...I would support that the US government could look into expanding that horizon and going to, I mean at least 50 years."
  — Karsten Jeske on 100-year bonds (22:58)

• On American vs. European Housing Culture:
  "I grew up in Germany and it would be totally unthinkable for 50-year olds still to get a new mortgage...But, I mean, it's just the way Americans roll."
  — Karsten Jeske (59:53)

Timestamps for Key Segments

• Introduction & Stakes: 00:00–03:34
• Investor vs. Owner-Occupant: 03:32–06:43
• Equity Building Math: 06:44–12:18
• Interest Rates & Market Timing: 12:25–14:23, 18:51–19:11
• Term Premiums/Debate: 24:44–31:05
• Prepayment/Convexity Risk: 31:05–35:03
• Interest Misconceptions: 44:17–48:51
• Retirement Paths & Mobility: 53:52–57:41
• Housing Market & Policy: 59:59–62:24
• Conclusion & Points of Agreement: 66:00–66:33

Conclusion: Takeaways

• The 50-year mortgage is not a one-size-fits-all solution and may only serve a small, financially savvy subset of buyers and investors.
• For owner-occupiers, particularly those stretching for affordability, ultra-long mortgages pose real risks with limited added benefit.
• Equity growth is driven by appreciation, not just principal paydown—a key point lost in popular arguments.
• Systemic rollout of 50-year mortgages, unaccompanied by housing supply reform, is likely to worsen affordability by inflating prices.
• Both host and guest stress that more mortgage options can be good, but policy must be cautious and accompanied by rigorous underwriting to prevent unintended consequences.

Where to Find Dr. Karsten Jeske:

• Blog: earlyretirementnow.com
• Twitter: Linked from his blog

For Further Discussion:

• Should America experiment with 50- or 100-year debt more broadly—government included?
• Can expanding mortgage terms be a responsible tool under certain market and policy conditions? __

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