What’s five decades to

pay off your mortgage

? Apparently, not much south of the border, where Americans may soon get the privilege of 50-year mortgages. Half a century before you own your home, assuming you live that long.

U.S. President

Donald Trump

floated the idea on social media, pitching it as a way to tackle housing affordability. It would stretch the traditional 30-year fixed-rate mortgage, the American gold standard, to 50 years.

That’s ten times longer than the five-year terms Canadians cling to, as if they offer real security against rising rates.

Let’s be clear: we’re not talking amortization here. Canadians already spread payments over 25 or 30 years. The difference is Americans lock in their

mortgage rate

for decades, while Canadians nervously line up every five years to renew for the historically most popular term.

Right now, 1.8 million Canadian homeowners are staring down renewals within the next year, bracing for the kind of sticker shock that will make them nostalgic for 2021’s sub-two-per-cent rates.

Many of those borrowers are about to see their interest rate double.

“It will put an ongoing bite on discretionary spending,” said Sal Guatieri, a senior economist with

Bank of Montreal

, who nevertheless thinks delinquency rates will remain low because most of those people had to qualify based on a rate closer to five per cent.

However, before Canadians start pining for American-style long-term stability, they should be aware that those long-term benefits come at a price, with hefty upfront fees and higher rates. Freddie Mac said the 30-year fixed-rate mortgage averaged 6.22 per cent this week which compares with a Canadian five-year fixed rare of just under four per cent.

Canadians do have the ability to sign up for a 10-year term but that option has been broadly unpopular, even when rates were ultra-low because of a more expensive

interest rate.

“I’ve been in the business for 16 years and done three 10-year mortgages,” said Shawn Stillman, a CPA and mortgage broker who co-founded the Mortgage Outlet.

He pointed out most banks in Canada sell five-year bonds, and they sell bonds to match mortgage rates. “I don’t know if we have the same appetite in Canada for 10-year debt as they do for 30-year debt in the States,” said Stillman.

On the consumer side, there is also a significant risk. “You break it after two years because maybe you get divorced and your interest-differential penalty is the eight-year remaining term,” said Stillman.

The IRD (interest rate differential) is intended to compensate lenders for the interest they lose when a mortgage is paid off early. “That penalty would take the knees out from someone,” said Stillman.

Janet Gao, an associate professor of finance at Georgetown University, said Americans will pay an upfront fee to compensate for a lower rate. Getting that lower rate makes for a complicated deal that some consumers don’t price out, she said.

“It’s not a free lunch,” Gao said, adding that U.S. banks have gotten good at managing their risk.

She said most Americans think of 30 years as a “very long horizon,” and she wonders how much interest will be created by increasing the term to 50 years.

She said she thinks the idea of the 50-year term is a result of the current higher rate environment. People are reluctant to move because they “don’t want to trade their cheap mortgages for an expensive one.” But the potential for a 50-year term might change that by keeping monthly payments in line.

“You are just going to pay it off much more slowly,” Gao said. “You pay it off forever.”

Then there’s the math. “It is a nightmare from the cost,” said Phil Soper, chief executive of Toronto-based

Royal LePage

and current chair of The Reality Alliance, a U.S. think-tank where the 50-year mortgage has come under discussion.

Based on his company’s most recent survey for a median-priced Canadian home of just over $817,000, Soper calculated the total lifetime interest cost over 30 years would be $682,000, assuming a 20 per cent down payment and a 5.5 per cent interest rate.

Move it to 50 years, and the interest cost rises to $1,627,000.

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In Canada, we had briefly moved amortizations to 40 years before coming to our senses. At some point, you are establishing almost no equity, and you have to wonder how much different stretching payments out is from renting, other than having home ownership costs.

“I don’t even know how it will work. If I get a house at 30, will I pay it off at 80 when I don’t have income?” said Gao.

We are talking about a mortgage, ultimately, that you will probably never pay off. That sure doesn’t sound like home ownership to me.

• Email: gmarr@postmedia.com