Trump’s Skepticism on 401(k) Withdrawal for Homebuying
President Donald Trump expressed his reservations on Thursday regarding a proposal that would let future homebuyers tap into their 401(k) retirement savings for down payments. Speaking to reporters aboard Air Force One during his return from the World Economic Forum in Davos, Switzerland, he remarked, “I’m not a big fan.” He noted that while some advocate for this approach, he believes it might not be the best decision.
Trump highlighted the strong performance of 401(k) accounts, mentioning that they have seen significant gains—between 80% and 90% in some instances. “The housing market is doing well, but 401(k)s are doing much better than the housing market,” he noted, indicating his preference to maintain these retirement funds in good condition. “I’m quite pleased with how my 401(k) is doing,” he added, somewhat defensively, underlining the robust performance over the past year.
Trump’s comments followed the administration’s initial review of the proposal which was presented last week amid broader efforts to make homeownership more affordable. Kevin Hassett, head of the National Economic Council, pointed out that the typical down payment for homes has skyrocketed from about $15,000 to roughly $32,000, stressing the increasing financial hurdles many families face in the housing market.
He suggested that the idea of allowing 401(k) withdrawals for down payments would soon be officially announced during Trump’s speech at Davos, although the president chose not to delve into this specific issue during his address. Instead, he concentrated on other elements of housing affordability, such as rising interest rates.
Trump emphasized the burden of credit card debt on those trying to save for down payments, calling for Congress to limit credit card interest rates to 10% for a year. However, his proposals have drawn both interest and criticism. The financial services sector has warned that capping interest rates could lead to reduced credit access, and existing cardholders might see benefits vanish.
The president also highlighted plans aimed at curbing large institutional investors from purchasing homes, criticizing their impact on housing prices as “totally unfair” to the average buyer. Nevertheless, some investors have voiced concerns that such restrictions might not alleviate housing supply challenges and could inadvertently push prices even higher.
