Trump Announces Investor ‘ban,’ Mbs Purchases And Credit Card Rate Cap In Davos

President Donald Trump said the U.S. will not “become a nation of renters” as he announced what he described as a “ban” on large institutional investors purchasing single-family homes during his speech at the World Economic Forum in Davos on Wednesday.

Trump also said he has directed the government-sponsored enterprises (GSEs) to acquire up to $200 billion in mortgage-backed securities (MBS) and has called on Congress to cap credit card interest rates at 10% annually, framing both moves as efforts to support homeownership. 

Notably absent, however, were several proposals anticipated by the mortgage industry, including allowing penalty-free 401(k) withdrawals for down payments and reductions to mortgage insurance premiums or other housing-related costs.

“Wall Street giants and institutional investment firms — many of you are here, many of you are good friends of mine, many of you are supporters — sorry to do this, I’m so sorry, but you’ve driven up housing prices by purchasing hundreds of thousands of single-family homes,” Trump told the audience. “It’s been a great investment for them. Often as much as 10% of houses on the market.”

“Homes are built for people, not for corporations, and America will not become a nation of renters,” he added. “That’s why I have signed an executive order banning large institutional investors from buying single-family homes. It’s just not fair to the public.”

Trump said he will ask Congress to codify the ban into permanent law.

Credit card debt

While Trump did not mention previously reported plans to allow penalty-free 401(k) withdrawals for down payments, he argued that rising credit card debt has become one of the biggest barriers to saving for down payment on a home.
According to Trump, profit margins for credit card companies now exceed 50%, while interest rates charged to consumers often range from “28%, 30%, 31%, 32%.”

“I’m asking Congress to cap credit card interest rates at 10% for one year, and this will help millions of Americans save for a home,” Trump said. “They have no idea they’re paying 28%. They go out there a little late in their payment, and they end up losing their house.” 

Mortgage rates

Trump also said he has instructed Fannie Mae and Freddie Mac to step up purchases of mortgage bonds to help lower interest rates, while also signaling that he plans to appoint a new Federal Reserve chair “in the not-too-distant future.” 

“Everyone that I interviewed is great. Everyone could do, I think, a fantastic job,” Trump said, referring to the potential candidates. “The problem is they change once they get the job.”

Trump again criticized current Fed Chair Jerome Powell, whom he originally nominated, accusing him of being “too late” on interest rate decisions.

Trump pointed to the recent dip in mortgage rates below 6% — the first such move in more than three years — which followed his social media post directing the GSEs to increase their MBS purchases. Rates are now back above 6%.

At the same time, he emphasized a desire to protect existing homeowners from price declines.

“I’m very protective of people that already own a house,” Trump said. “Every time you make it more and more affordable for somebody to buy a house, you’re actually hurting the value of those houses — obviously, because the one thing works into the other.

“And I don’t want to do anything that’s going to hurt the value of people that own a house, who, for the first time in their lives, are walking around the streets of whatever city they’re in, very proud that their house is worth $500,000, $600,000 or $700,000.”