Danielle Kayebusiness reporter
US President Donald Trump is set to announce a plan that will allow Americans to use their retirement savings for down payments on homes.
National Economic Council Director Kevin Hassett, who hinted at the plan on Friday, provided few details about how withdrawals from U.S. workplace retirement accounts — known as 401(k)s — would work.
“Let’s say you invest 10% on a home, and then you take 10% of the home’s equity and put it into your 401(k) as an asset. Then your 401(k) will grow over time,” Hassett said on Fox Business.
He said Trump would present a “final plan” at the Davos World Economic Forum next week.
The White House did not immediately respond to a request for comment on the upcoming proposal, including tax implications. Currently, employees who choose to withdraw money from retirement accounts typically have to pay fees and taxes.
The anticipated 401(k) plan is the latest in a string of recent housing affordability proposals as Trump’s administration faces growing public frustration about its handling of the economy.
Home affordability remains high on the list of Americans’ concerns. Trump has tried to ease voters’ anxiety ahead of the midterm elections later this year by announcing a series of proposals aimed at addressing the high cost of housing in recent weeks.
Last week, Trump said he would take steps to ban large corporate investors from buying single-family homes in order to make housing more affordable for Americans. That pledge lent credence to an idea that has been circulating for years, though some analysts question to what extent the ban will affect prices.
Trump recently directed government-backed housing finance firms Fannie Mae and Freddie Mac to buy $200bn (£149.4bn) worth of mortgage bonds.
His announcement came after Trump said the average rate on a 30-year mortgage fell below 6% for the first time in nearly three years, referring to the Federal Reserve during a speech in Michigan this week — “and that’s not with the help of the Fed.” The Fed’s benchmark interest rate can indirectly influence mortgage rates.
Hassett promoted Trump’s move to order bond purchases on Friday. “We’ve seen a huge response to the announcement, and I think it actually makes us all feel better, because the truth is, fewer people are buying homes right now than we’ve seen in our lifetime,” he said.
But housing economists caution that bond purchases may not reduce mortgage rates significantly in the long run.
“The key thing now is the timing and cadence of these purchases, which will determine whether the impact is healthy or brings volatility to the mortgage market,” said Jeff Dergurahian, chief economist at mortgage lender LoanDepot.