Facing pressure to address voter affordability, U.S. President Donald Trump has introduced several policy proposals aimed at boosting home ownership and controlling living costs. These initiatives, some aligning with past Democratic proposals, are expected to be discussed further at the Davos meeting this week. However, economists caution that these measures could have major implications for financial firms and investors while offering limited relief to living costs.
Trump’s proposals include banning Wall Street investors from buying single-family homes, a move aimed at reducing home prices. Government data indicates that Wall Street investors owned approximately 3% of single-family rental homes in 2022. Additionally, Trump has suggested capping credit card interest rates at 10% for one year, a move that has faced opposition from banks and would require Congressional approval. Senator Elizabeth Warren has confirmed discussions with Trump regarding legislative efforts to cap credit card rates and regulate Wall Street landlords.
In other housing-related initiatives, the administration plans to allow retirement savers to use their 401(k) funds for house down payments, details of which are expected this week. A 401(k) plan allows workers to save pre-tax earnings for retirement. Furthermore, Federal Housing Finance Agency Director Bill Pulte announced that Fannie Mae and Freddie Mac will purchase $200 billion in mortgage bonds to lower housing costs. Fannie Mae and Freddie Mac are government-sponsored enterprises that buy mortgages from lenders, package them into securities, and sell them to investors. This initiative has already seen the average rate on a 30-year fixed-rate mortgage fall to 6.06%.
Trump has also proposed replacing government subsidies for health insurance with direct payments to consumers and outlined a legislative plan to lower drug prices and insurance premiums. However, experts suggest that the healthcare proposal may negatively impact lower-income Americans, and the plan’s timeline remains uncertain due to a divided Congress.
