Trump backs off 401(k) home plan, keeps focus on rates, markets and investor limits
US President Donald Trump has abruptly backed away from a flagship idea to let Americans raid their 401(k) retirement plans for home down payments, even as he leans on housing policy to tackle cost-of-living pressures.
According to Bloomberg, Trump told reporters aboard Air Force One that he prefers to keep retirement savings intact rather than allow withdrawals for deposits on homes as part of his affordability agenda.
He said he likes people to “keep their 401(k)s” and is “not a huge fan of putting down a deposit,” describing himself as “so happy with the way 401(k)s are doing” during his flight back to Washington from the World Economic Forum.
He added that while “other people like” taking money out to put a deposit on a home, he opposes it partly because “their 401(k)s are doing so well.”
This marks a sharp reversal from what his own advisers had been signalling.
Bloomberg reported that on January 16, top White House economic adviser Kevin Hassett said Trump planned to unveil in Davos a proposal to let 401(k) savers use some of their retirement money for home down payments.
More details were expected at the State of the Union in late February.
Hassett also told Fox Business Network that the administration planned to let people withdraw 401(k) funds to buy homes. But Trump later said on Air Force One, “I’m not a huge fan. Other people like it. One of the reasons I don’t like it is that their 401(k)s are doing so well.”
For retirement-focused stakeholders, the shift effectively keeps 401(k) rules unchanged, despite earlier political interest in tying retirement savings more directly to housing access.
Bloomberg noted that some real estate analysts had already questioned the proposal, pointing out that prospective homebuyers can already borrow against their 401(k) accounts if needed, as long as they repay the loan with interest.
Analysts also warned it would touch only a narrow slice of the labour market and, to the extent it pushed more money into housing, would likely drive home prices higher.
Trump, a former real estate developer, underscored the relative strength of retirement plans versus property.
Reuters reported that he said retirement accounts were doing “much better” than the housing market.
The news agency noted that the S&P 500, one of the most widely tracked stock indexes, gained 16.39 percent last year, while the Nasdaq Composite Index rose more than 20 percent, aligning with his emphasis on strong 401(k) performance.
Even as the 401(k) idea is shelved, Trump continues to frame housing affordability as a priority amid economic headwinds and public frustration with the cost of living.
Reuters said he has made boosting home ownership rates and driving down interest rates a top objective as he faces congressional elections this fall.
US housing affordability remains strained, with high mortgage rates and elevated home prices sidelining many would-be buyers and slowing market activity.
Trump has turned to other levers.
According to Bloomberg, he used his Davos appearance to highlight an executive order he signed that aims to limit institutional home purchases, while also reiterating his desire to limit credit card interest rates.
Reuters reported that on Tuesday he signed an executive order to restrict large institutional investors from competing with individual homebuyers in an effort to make housing more affordable.
The same report said that in recent weeks Trump has instructed the US Federal Housing Finance Agency to buy US$200bn of bonds issued by mortgage finance giants Fannie Mae and Freddie Mac to bring down mortgage rates.
It also said he has repeatedly called on the US Federal Reserve to lower its benchmark rates.
Recent consumer inflation data show housing inflation remained strong, Reuters added, and investors have been watching for policy moves, market shifts and lower interest rates that could lift mortgage application volumes after a prolonged housing slowdown.
However, structural supply constraints remain in focus.
Some analysts and economists see a lack of US housing supply as a key issue and argue that changes to local zoning and construction regulations could have a bigger impact.
They caution that lower rates could increase demand and, without more supply, would likely push prices higher.
