John Hope Bryant was the largest minority owner of single-family rental homes in America before he sold his company, and has served as an adviser to two former presidents. And now, as founder and executive director of Operation HOPE, a nonprofit that seeks to expand economic opportunity for all, Bryant wants to enforce 40-year mortgages.
It occurred to him when he was in the middle of an interview, and he is not the first to suggest it, but he said AssetsHe’s the first to structure it this way. Bryant’s proposal for first-time homebuyers is a 40-year mortgage with a subsidized interest rate between 3.5% and 4.5%; they would have to complete financial literacy training, and subsidies would be capped at $350,000 for rural areas and $1 million for urban areas. For him, there’s no age limit. If you’re 45, have kids, and have rented your whole life, this can be a way to buy your first home and build intergenerational wealth, Bryant explained.
“Why discriminate against someone because they’re older? That’s crazy,” he said. “Let them buy the house like a 20-year-old would, and who knows? Maybe they’ll surprise us and live to be 100.”
For Bryant, the 40-year mortgage means lower monthly payments on an appreciating and transferable asset at a time when many people can’t afford a home. The 30-year mortgage was not well thought out; it grew out of the Great Depression, and everything needs to be upgraded at some point, Bryant said. America has a huge housing problem right now. Home prices are high, and so are mortgage rates. There aren’t enough homes, which is due to years of underbuilding in the wake of the Great Financial Crisis and decades of policy failure. The lock-in effect, a temporary phenomenon that occurs when mortgage rates rise so quickly, is another factor — and it’s keeping people from selling their homes.
The real estate world goes through booms and busts, and in the most recent cycle, the lock-in effect is partly responsible for existing home sales falling to their lowest levels in nearly 30 years and existing home values rising. So it would be plausible to think that a 40-year mortgage would make that worse. “It doesn’t require any additional inventory,” Bryant said, later adding, “The 40-year mortgage is in and of itself just a Band-Aid… the operation that solves that problem is long-term inventory.”
Inventory is up this year compared to last year, but we are still a long way from what is needed to end the housing shortage. Still, the 40-year mortgage will not work on its own; it must be accompanied by increased supply.
A 40-year mortgage is, to be clear, a huge burden. The thought of being in debt for four decades might send shivers down your spine, but there isn’t a single millionaire or billionaire in the country who could have done it without what Bryant calls “good debt” – and he can’t think of a better idea, at least not right now.
“Does the market have a better idea to solve the problem of affordability and widespread access that is still based on free market economics and capitalism?” he asked. “We’re not talking about socialism or communism or any of that crazy shit…if somebody has a better idea, I’m all ears. I’m sure when auto loan terms were raised from three and four years to four to eight years, people said that was crazy.”
Not to mention, Bryant said, we shouldn’t let perfect be the enemy of good. If the ideal solution is to build more housing — and urban economists and housing policy analysts will tell you it is — then that takes time. Bryant believes that doing so now could give people a chance to achieve the American dream.
He declined to comment, but said he had already shared the idea with senior federal government officials and “they didn’t say it was crazy,” Bryant said.
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