Trump weighs major move to privatize mortgage giants Fannie Mae and Freddie Mac

President Donald Trump announced on May 21 that he is seriously considering the privatisation of Fannie Mae and Freddie Mac, the government-sponsored enterprises that play a critical role in stabilising and supporting America’s home mortgage market.

Posting on his social media platform, Truth Social, Trump said he plans to consult with his cabinet members and make a decision “in the near future”, Caliber.Az reports via American media.

He noted, “Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right.”

Fannie Mae and Freddie Mac essentially help keep the mortgage market moving by purchasing home loans from lenders and packaging them for investors. This process ensures a steady flow of capital, enabling mortgage lenders to offer more affordable rates to homebuyers. The two entities are widely credited with helping sustain the 30-year fixed-rate mortgage, the most popular loan type in the U.S., favoured for its relatively low monthly payments compared to shorter-term loans.

However, some economists caution that privatising these mortgage giants amid persistently high mortgage rates and rising home prices could destabilise the market. They warn that such a move might prompt investors to demand higher returns, pushing mortgage rates even higher and making home loans more costly for Americans.

Trump’s push to privatise Fannie and Freddie is not new. Since their government takeover during the 2008 financial crisis, many Republicans have called for ending the government conservatorship imposed on the companies. The move to bring them under government control was meant to be temporary after the mortgage meltdown triggered the Great Recession.

During his first term in office, Trump unsuccessfully attempted to unwind government control of the entities in 2019.

Originally created by the government but operating as private companies before 2008, Fannie and Freddie were placed under conservatorship on September 7, 2008, after suffering massive losses tied to plunging home values. Their collapse was a key event leading up to the financial crisis, which intensified when Lehman Brothers filed for bankruptcy a week later.

Experts like Mark Zandi, chief economist at Moody’s Analytics, have warned that privatisation could cost typical new mortgage borrowers an additional $1,800 to $2,800 annually.

Currently, Fannie and Freddie are overseen by the Federal Housing Finance Agency (FHFA), led by William Pulte since March. Pulte has stressed that any privatisation effort would require “significant study” to assess its impact on mortgage rates — a process that could take years.

Industry analysts expect that any serious push to spin off Fannie and Freddie would likely not come until late 2026 or early 2027, according to Jaret Seiberg, a financial services and housing policy analyst at TD Cowen.

By Tamilla Hasanova