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President Trump has rejected his adviser's suggestion to let Americans use 401(k) funds for home purchases, citing the strong performance of retirement accounts. Despite rising stock markets, he is prioritizing homeownership and affordability through policy measures like restricting institutional investors in housing and instructing the purchase of Fannie Mae and Freddie Mac bonds to lower mortgage rates. However, economists warn that supply constraints and regulatory barriers could limit the impact of these moves, potentially increasing prices if demand rises faster than housing availability.
U.S. President Donald Trump has expressed his opposition to a proposal that would allow Americans to use their 401(k) retirement funds for home down payments. The idea was suggested by his chief economic adviser, Kevin Hassett, last week on Fox Business Network. Trump, speaking to reporters aboard Air Force One, said he is not a fan of the plan, noting that retirement accounts are performing very well and should be preserved. Advertisement
Trump, a former real estate developer, highlighted that 401(k) accounts have been growing faster than the housing market. The S&P 500 gained 16.39% last year, while the Nasdaq Composite Index rose over 20%.
Despite this, Trump has focused on increasing homeownership and reducing mortgage rates. Housing affordability remains a challenge for many Americans due to high home prices and elevated mortgage rates, which have slowed market activity. Earlier this week, Trump signed an executive order aimed at limiting competition from large institutional investors in the housing market, intending to make homes more accessible to individual buyers.
Additionally, he has instructed the Federal Housing Finance Agency to buy USD 200 billion in bonds from Fannie Mae and Freddie Mac to help reduce mortgage rates. Trump has also urged the Federal Reserve to lower benchmark rates, citing strong housing inflation in recent consumer data.
While investors are closely watching these policy measures and potential interest rate cuts, some economists caution that increasing demand without addressing supply constraints could push home prices even higher. Local zoning and construction regulations may play a crucial role in improving affordability over the long term.
Source Reuters
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