John Hope Bryant once led the largest minority-controlled owner of single-family rental homes in America, and served as an advisor to two presidential administrations. And now, as founder and chief executive of Operation HOPE, a nonprofit that aims to expand economic opportunity for everyone, Bryant wants 40-year mortgages to be a thing.
The idea came to him while he was in the middle of an interview, and he’s not the first to suggest it either, but he told Fortune he’s the first to structure it in this way. Bryant’s proposal for first-time homebuyers is a 40-year mortgage with a subsidized 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. There’s no cap on age for him. If you’re a 45-year-old with kids who’s been renting your whole life, it can be a way to buy that first home and build generational wealth, Bryant explained.
“Why discriminate against somebody because they’re older? That’s crazy,” he said. “Let them buy that house just like a 20-year-old would, and who knows? Maybe they’ll surprise us and live to 100.”
To Bryant, the 40-year mortgage means lower monthly payments on an appreciating and assumable asset at a moment in time when a lot of people can’t afford to buy a home. The 30-year mortgage wasn’t something thoroughly thought out; it was born out of the Great Depression, and everything needs an upgrade eventually, Bryant said. America has a huge housing problem right now. Home prices are high, and so are mortgage rates. There aren’t enough homes, resulting from years of underbuilding in the aftermath of the Great Financial Crisis and decades of policy failure. The lock-in effect, a temporary phenomenon that occurs when mortgage rates soar so swiftly, is another factor at play—and it’s keeping people from selling their homes.
The housing world experiences booms and busts, and in the latest cycle, the lock-in effect is partly to blame for existing-home sales falling to their lowest point in almost 30 years and elevating existing-home values. So it would be plausible to assume a 40-year mortgage would make that worse. “It does without additional inventory,” Bryant said, adding later: “The 40-year mortgage, in and of itself, is a Band-Aid … The surgery that fixes this problem is long-term inventory.”
Inventory has increased this year compared to last, but we’re a far cry from what’s needed to end the housing shortage. Accordingly, the 40-year mortgage won’t work on its own; it needs to work in unison with more supply.
A 40-year mortgage, to be clear, is daunting. The mere thought of being in debt for four decades might send shivers up your spine, but there isn’t a single millionaire or billionaire in the country who did it without what Bryant calls “good debt”—and he doesn’t see a better idea out there, not at present.
“Does the market have a better idea for solving affordability and broad access, still rooted in free enterprise and capitalism?” he asked. “We’re not talking about socialism or communism or some crazy stuff … If somebody has a better idea, I’m all ears. I’m sure that when car loans went from three-year and four-year terms to four- to eight-year terms, I’m sure that people said that’s crazy.”
Not to mention, Bryant said, we shouldn’t let perfect be the enemy of good. If the ideal solution is building more homes—and urban economists and housing policy analysts will tell you it is—well, that takes time. This could give people a shot at the American dream now, in Bryant’s mind.
He wouldn’t say much, but noted that he’s already shared the idea with senior people in the federal government, and “they did not say it was crazy,” Bryant added.
