Trump tells homebuyers priced out of the market: ‘Wait a little longer’

By Katy O’Donnell | Bloomberg

President Donald Trump said consumers should “wait a little longer” for mortgage rates to drop further, a plea for patience from the electorate as voters show dissatisfaction with his handling of the economy and affordability issues.

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Potential homebuyers should “save a little money, wait a little longer, you’re going to get a mortgage for a very low rate,” Trump said Friday ahead of boarding a flight to Texas.

The remark echoed his comment about the issue in his State of the Union address to Congress on Tuesday, which tacitly acknowledged limits to the federal government’s ability to affect housing prices.

“Lower interest rates will solve the Biden-created housing problem while at the same time protecting the values of those people who already own a house that really feel rich for the first time in their lives,” Trump said in his speech.

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Trump has expressed optimism that the Federal Reserve will lower interest rates under Kevin Warsh, his choice to replace Chair Jerome Powell. But what the Fed will do, and whether its policies will filter through to mortgage rates, is uncertain.

With affordability issues topping voters’ concerns in multiple surveys in recent months, the administration has floated a handful of trial balloons aimed at lowering the cost of buying a home, to mixed results. Some proposals — such as having banks offer 50-year mortgages or “portable” mortgages — were later dismissed by the financial industry or the president himself.

One proposal the administration stuck with was Trump’s order to have Fannie Mae and Freddie Mac, the government-controlled companies underpinning the mortgage market, purchase $200 billion in mortgage bonds. That is expected to drive down mortgage rates by as much as 50 basis points. The interest rate on a 30-year fixed mortgage loan dropped to 5.98% this week, according to Freddie – the lowest level in more than three years.

The White House is also pushing Congress to take up legislation barring institutional investors from buying additional single-family homes. But small investors account for more than 90% of the market of investor owners, so it’s not clear such a ban would significantly move the needle on prices. Large institutional investors own about 2-3% of the nation’s single-family rental stock, or less than 0.5% of the total housing stock.

Josh Wingrove at Bloomberg contributed to this report.