Trump Administration’s New Housing Affordability Initiative
Kevin Hassett, the Director of the National Economic Council, is set to appear on “Morning with Maria” to discuss President Donald Trump’s comprehensive affordability strategies. These strategies aim to lower mortgage and credit card rates, ultimately fostering economic growth.
Recently, the administration has been emphasizing housing affordability, with Hassett revealing how Americans might tap into their 401(k) funds for home down payments. He pointed out, “The typical monthly payment for a family purchasing a regular home has nearly doubled. Meanwhile, the required down payment has surged from around $15,000 to about $32,000. There’s a significant gap to bridge.” This was shared during a conversation with FOX Business’ Maria Bartiromo.
“We have a range of policies to assist homeowners,” he added, highlighting that Trump will reveal a final plan in Davos next week, where Hassett will accompany him. This plan apparently will allow individuals to withdraw funds from their 401(k) to use as a down payment.
Hassett also discussed Trump’s proposal urging lawmakers to invest $200 billion in mortgage-backed securities, claiming this could lead to decreased interest rates. In his words, the President stated, “Biden has overlooked the housing market, choosing instead to focus on issues like high crime rates and inflation.”
Trump further claimed, “I decided against selling Fannie Mae and Freddie Mac during my first term. Against the advice of some, the housing market is now worth significantly more, an incredible asset, and we have $200 billion in cash. That’s why I’m instructing Congress to buy $200 billion in mortgage bonds to make homeownership more attainable.”
When asked about potential risks of allowing 401(k) withdrawals, especially for retirement savers, Hassett seemed to downplay those worries. “It’s really about finding a straightforward method. Imagine putting down 10% on a home and then taking 10% of the home’s equity as a 401(k) asset. Over time, your 401(k) grows,” he described.
He argued that as the home value rises, individuals would be in a better financial position for their retirement. This approach, he believes, could alleviate liquidity issues and help younger people acquire homes sooner.
Traditionally, Americans cannot withdraw from their 401(k) plans without facing penalties for first-time home purchases. While there’s a “first-time homebuyer exception” for IRAs that minimizes penalties, this rule doesn’t extend to 401(k) plans. According to NerdWallet, those who withdraw early typically face a 10% penalty and income taxes.
However, Bankrate notes that a more common option is to access 401(k) funds as loans instead of direct withdrawals.
