President Trump outlined four policies Wednesday at the World Economic Forum in Davos, Switzerland, aimed at making homeownership more affordable: lower interest rates, a ban on large institutional investors buying single-family homes, a credit card interest rate cap, and federal mortgage bond purchases.
The U.S. housing market has been in a sales slump for four years, with home sales stuck at 30-year lows. Trump’s affordability push reflects ongoing concern about homeownership access ahead of the midterms.
Trump stressed that lower interest rates on home loans and credit cards would provide aspiring homebuyers with more financial flexibility to save for down payments and greater purchasing power when buying.
“We can drop interest rates to a level, and that’s one thing we do want to do,” Trump said at Davos. “That’s natural. That’s good for everybody. You know, the dropping of the interest rate, we should be paying a much lower interest than we are.”
Housing market context
The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. The combination of higher mortgage rates, years of skyrocketing home prices, and a chronic shortage of homes nationally have left many aspiring homeowners priced out of the market.
The average rate on a 30-year mortgage was 6.06 percent, its lowest level in more than three years, according to mortgage buyer Freddie Mac. Even so, the biggest hurdle many aspiring homeowners face remains saving up for a down payment.
Mortgage bond purchases and Fed policy
Trump said he has directed the federal government to buy $200 billion in mortgage bonds to help reduce mortgage rates. But some economists have said such a move would likely have only a minimal impact on mortgage rates.
Fed rate cuts don’t always translate into lower mortgage rates. That pattern played out in fall 2024 after the central bank cut its main rate for the first time in more than four years. Instead of falling, mortgage rates marched higher, eventually cresting above 7 percent in January.
Trump reiterated that he will announce a new Federal Reserve chair soon to replace Jerome Powell, whose term as chair is due to end in May.
Credit card interest rates
Trump asked Congress for legislation that would mandate credit card issuers cap interest rates at 10 percent for one year. This came after the credit card industry ignored his demand earlier this month that they implement the cap by Jan. 20.
The average rate on credit cards is around 21 percent, according to the Federal Reserve Bank of New York.
Blocking institutional investors
Trump also reiterated his intention to block large institutional investors from buying single-family homes, so that Americans don’t have to compete with well-funded rivals when shopping for a home.
“Homes are built for people, not for corporations, and America will not become a nation of renters,” Trump said.
Trump issued an executive order Tuesday directing his administration to review laws governing how big institutional investors make large purchases of single-family homes and determine whether such investors are engaging in anti-competitive practices. The order exempts companies that build homes for rent.
It also includes provisions to give ordinary home shoppers the opportunity to buy foreclosed homes before investors do, and bars government housing agencies from guaranteeing, insuring, or otherwise facilitating large institutional investors from buying single-family homes.
It is unclear how the administration will define a large investor. While some metro areas, like Atlanta and Phoenix, have a larger share of corporate-owned single-family homes for rent, the vast majority of rental houses are owned by small individual investors, which wouldn’t be barred from buying more homes.
“It probably won’t make a noticeable impact on the housing market,” said Daryl Fairweather, chief economist at Redfin.
The White House is reportedly considering a new way for Americans with 401(k) retirement savings plans to fund down payments on homes, among other policies.