Trump pushes for lower rates and ban on investor home purchases in bid to make homes more affordable

President Trump unveiled a multi-faceted plan to increase homeownership accessibility for Americans during his address at the World Economic Forum in Davos, Switzerland. His strategy focuses on lowering interest rates, restricting institutional investors from purchasing single-family homes, and implementing credit card interest rate caps.

The U.S. housing market has been struggling since 2022 when mortgage rates began rising from pandemic-era lows. This increase, combined with years of escalating home prices and a chronic housing shortage following more than a decade of below-average construction, has left many potential homebuyers unable to enter the market. Sales of previously owned homes remained at 30-year lows throughout last year.

“We can drop interest rates to a level, and that’s one thing we do want to do,” Trump said during his speech. “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.”

The President has directed the federal government to purchase $200 billion in mortgage bonds, a measure he claims will help reduce mortgage rates. According to Trump, Fannie Mae and Freddie Mac have $200 billion in cash that would be utilized for this purpose. However, some economists have expressed skepticism, suggesting such a move would likely have minimal impact on mortgage rates.

Trump also announced plans to replace Federal Reserve Chair Jerome Powell, whose term ends in May. Throughout last year, Trump consistently called for the Federal Reserve to lower interest rates, though Fed rate cuts don’t always translate directly to lower mortgage rates. This was evident in fall 2024 when, despite the central bank’s first rate cut in over four years, mortgage rates actually increased, eventually exceeding 7% in January 2025.

More recently, the average rate on a 30-year mortgage dropped to 6.06% last week, its lowest level in more than three years, according to mortgage buyer Freddie Mac. While lower mortgage rates enhance homebuyers’ purchasing power, saving for a down payment remains the largest obstacle for many aspiring homeowners.

To address this challenge, Trump is requesting legislation from Congress that would mandate credit card issuers cap interest rates at 10% for one year. This comes after the industry ignored his earlier demand to implement the cap by January 20. Current average credit card interest rates stand around 21%, according to the Federal Reserve Bank of New York.

Another key component of Trump’s housing plan is blocking large institutional investors from purchasing single-family homes, aiming to reduce competition for individual homebuyers.

“Homes are built for people, not for corporations, and America will not become a nation of renters,” he stated emphatically.

Trump issued an executive order Tuesday directing his administration to review laws governing institutional investors’ large-scale purchases of single-family homes and to determine whether such investors engage in anti-competitive practices. The order exempts companies that build homes specifically for rent and includes provisions giving ordinary home shoppers priority to purchase foreclosed homes before investors.

The order also bars government housing agencies from guaranteeing, insuring, or otherwise facilitating large institutional investors’ purchases of single-family homes. However, the administration has yet to define what constitutes a “large investor,” and housing market experts remain skeptical about the potential impact.

“It probably won’t make a noticeable impact on the housing market,” said Daryl Fairweather, chief economist at Redfin, noting that while some metro areas like Atlanta and Phoenix have significant corporate ownership of single-family rental homes, most rental houses are owned by small individual investors who wouldn’t be affected by the restrictions.

Throughout his speech, Trump emphasized the need to balance making housing more affordable without destabilizing the market for current homeowners who have benefited from equity gains.

“Every time you make it more affordable for somebody to buy a house cheaply, you’re actually hurting the value of those houses,” he explained. “If I want to really crush the housing market, I could do that so fast that people could buy houses, but you would destroy a lot of people that already have houses.”

The White House is reportedly considering additional policies, including a new mechanism for Americans with 401(k) retirement savings to fund home down payments, though specific details remain forthcoming.