Could a 50-year mortgage work in Malta? Experts weigh in on feasibility and risks

In the United States, former President Donald Trump’s recent proposal for a 50-year mortgage has stirred controversy.

The idea is simple: stretch mortgage terms further to make monthly repayments smaller, in turn making homeownership more accessible. But experts have warned that this could come at the cost of slower equity growth and significantly higher lifetime interest payments.

Could such a long-term mortgage ever work in Malta?

BusinessNow.mt reached out to Bank of Valletta (BOV) and real estate agent Justin Camilleri to explore how a 50-year mortgage would fit into Malta’s housing and financial landscape.

‘A fifty-year loan could be feasible’ – but life expectancy and income matter

Malcolm Bray, Head of Economics at BOV, said the idea of a 50-year mortgage is not entirely far-fetched, given that “property is a long-term asset, so it makes sense to match it with a long-term liability.”

He explained that the loan period could be justified when considering the lifespan of a property and Malta’s growing life expectancy. “A fifty-year period may be considered within the useful life of a property and hence having a fifty-year loan could be feasible. At the same time, in 2024 life expectancy in Malta reached 83.3 years, which means that repayment periods can feasibly extend for fifty years if one purchases property in their thirties.”

However, Mr Bray cautioned that affordability in later life must be taken into account.

“What is important is that people beyond pension age have recourse to regular sources of income apart from the state pension, which would be the case if people enrol in private pensions, with an appropriate monthly saving. Extending the loan repayment over longer years would entail lower monthly servicing of the loan.”

BOV: Malta’s regulatory framework already caps loan terms

While the idea might sound attractive in theory, Ruth Camilleri, Head of Consumer Finance at BOV, noted that Malta’s banking framework already sets clear limits on mortgage terms and borrower eligibility.

“It is important to note that the ’40 years’ loan term and ’25 years’ customer age, depending on the category of the borrower, are set by the Central Bank of Malta (CBM).

The 40-year term is designed to reflect the working life of a typical individual based on the current local retirement age of 65,” she explained.

“This alignment ensures that the mortgage term is in sync with the borrower’s earning years,” she continued, adding that younger borrowers often face another major challenge: saving enough for the initial contribution. “When considering the ability for someone younger than 25 to take up a home loan, a consideration would be that they must contribute at least 10 per cent of the property’s value, in addition to covering other duties and fees. For an individual who has just started working, following the completion of their studies, it is not easy to have the contribution available in such a short time.”

Ms Camilleri also clarified that while banks can, in some cases, extend mortgages beyond retirement age, it is subject to strict conditions. “Extending mortgage terms beyond retirement age is permitted by the directive however, it’s not universally applicable. The bank, as mandated by the directive, must ascertain that the borrower will have a reliable income stream for the entire duration of the loan.”

Real estate perspective: ‘It might push prices up even more’

From the property market side, real estate agent Justin Camilleri acknowledged that longer mortgage terms could initially help some buyers enter the market.

“A 50-year mortgage might help some people get on the property ladder since it spreads payments out and makes monthly costs smaller. But honestly, I think it would probably push prices up even more. Once buyers have more borrowing power, sellers usually adjust. The demand for property in Malta is strong as it is, so I don’t think it would really solve the affordability issue – it might just make the market busier.”

Despite concerns about affordability, Mr Camilleri added that Maltese attitudes towards property ownership could make such a loan culturally acceptable. “In Malta, property is more than just a place to live – it’s a long-term family investment that often gets passed down. So in that sense, a 50-year mortgage wouldn’t feel that strange. Most people here buy for the long term anyway, and homes often stay in the family. I think culturally it would fit, because it’s about building something solid for the next generation.”

‘A lifetime commitment – on paper only’

Still, the notion of paying a mortgage into one’s 70s raises questions about long-term financial stability. Mr Camilleri believes this may be less of a concern in practice. “Paying a loan until 75 sounds scary on paper, but in reality, most people don’t keep the same mortgage that long. They sell, upgrade, or refinance as life changes – maybe when the family grows or when they move up in their career. So a 50-year loan would mainly give younger buyers more breathing room early on, rather than being a lifetime commitment.”

A balancing act

While the prospect of a 50-year mortgage could, in theory, make home ownership more accessible, both banking and real estate experts caution that the implications for Malta’s market and regulatory environment would be complex.

With current mortgage terms already reaching 40 years – and housing prices continuing to rise – extending repayment further may offer short-term relief, but could also risk fuelling demand and driving prices even higher.

As BOV’s experts suggest, any move towards longer-term lending would have to balance affordability with financial prudence – and ensure that buyers entering the market today aren’t still paying for it well into retirement.