WASHINGTON, Jan 20 (Reuters) - President Donald Trump has put forward several major policy proposals focused on increasing home ownership and controlling living expenses. This comes as he faces pressure to address voter affordability concerns before this year's congressional elections.
Some of these proposals bring the Republican president in line with Democratic lawmakers who have previously advocated for similar measures.
Economists have warned that while these proposals could significantly impact financial firms and investors, they may do little to actually reduce living costs. Trump is anticipated to offer more details on how his administration plans to implement them during his appearance at the Davos meeting of global business leaders this week.
Earlier this month, Trump stated on his social media platform Truth Social that his administration is taking steps to prohibit Wall Street investors from purchasing single-family homes, an effort intended to lower home prices. Government data shows Wall Street investors owned approximately 3% of single-family rental homes in 2022. No specifics were provided on how the ban would be enforced.
Also this month, Trump proposed via Truth Social to cap credit card interest rates at 10% for one year starting January 20. Industry sources described the move as surprising, saying it blindsided lenders and caused financial stocks to fall. Analysts note that such a cap would require congressional action and point out that previous bills aiming to limit credit card rates have never progressed.
White House press secretary Karoline Leavitt said last week that Trump expects credit card companies to comply. Banks have strongly opposed the proposal, arguing it would force them to reduce credit availability and ultimately harm consumers.
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, said Trump subsequently spoke with her about advancing legislative efforts she has long pushed to cap credit card rates and crack down on Wall Street landlords. Bloomberg reported on Friday that the administration is considering an executive order to address credit card caps.
Last week, White House economic adviser Kevin Hassett told Fox Business Network that the administration plans to allow retirement savers to use their 401(k) funds for house down payments. More details are expected this week. Hassett added that ways are being explored to permit this use without damaging retirement plans. A 401(k) plan enables workers to save pre-tax earnings for retirement.
Also this month, Federal Housing Finance Agency Director Bill Pulte, acting at Trump's request, announced that government-run mortgage finance giants Fannie Mae and Freddie Mac will purchase $200 billion in mortgage bonds to reduce housing costs, with $3 billion already bought. Pulte told Reuters the initiative will be funded by liquidity on the entities' balance sheets. Following this move, the average rate on the popular 30-year fixed-rate mortgage dropped to 6.06%, its lowest level since September 2022.
Pulte last year also suggested the idea of a 50-year mortgage as a means to make homes more affordable than typical 30-year loans. Critics quickly argued this would result in homeowners paying more interest and taking longer to build equity.
Trump said last week he plans to replace government subsidies for health insurance with direct payments to consumers. Some experts have said this idea would hurt lower-income Americans. The White House outlined a one-page legislative plan it claims would lower drug prices and insurance premiums, increase cost transparency, and hold insurance companies accountable. Policy experts stated a divided Congress is unlikely to pass major healthcare legislation quickly, though no timeline was provided.