A bold plan to overhaul the U.S. mortgage market is stirring fierce debate. Former President Trump’s proposal to privatize Fannie Mae and Freddie Mac — the government-sponsored enterprises that back roughly half of U.S. mortgages — could raise borrowing costs significantly, analysts warn.According to housing market experts and Senate Democrats, the move could increase mortgage rates by as much as 1%. Proponents argue that privatization would boost competition and reduce taxpayer risk. Critics see a potential affordability disaster.
Why It Could Hit Buyers Hard
- A 1% rate increase could slash a typical buyer’s purchasing power by over $50,000.
- First-time buyers and middle-income households would likely feel the greatest pinch.
- Higher rates could further cool home sales, especially in already strained markets.
“Privatizing Fannie and Freddie sounds pro-market, but the cost to the average American family could be steep,” says Jordan Lee, a senior housing policy analyst at Urban Institute.
What’s at Stake
Beyond rates, the proposal could reshape how risk is priced in the mortgage market — affecting everything from down payment requirements to loan availability in underserved communities.
This proposal could become a defining issue in housing policy debates heading into the 2026 election cycle. Buyers, lenders, and policymakers will be watching closely as details emerge and political battles heat up.
We’ll follow the legislative debate and analyze how potential changes could shape the mortgage landscape in coming months.
