As the U.S. housing market braces for potential upheaval, significant changes are anticipated for Fannie Mae and Freddie Mac, the two government-sponsored enterprises that play a crucial role in the mortgage sector. According to a recent survey conducted by JPMorgan Chase from January 16 to January 23, 2025, nearly 48% of mortgage-backed securities investors believe that these entities may undergo privatization by 2028 [1d6cdbb1]. This aligns with President Donald Trump's previously stated interest in privatizing Fannie Mae and Freddie Mac, which he argues could generate over $300 billion in profits for the government [1d6cdbb1].
The implications of such a shift are profound, particularly for homeowners and potential buyers. Experts warn that privatization could lead to higher mortgage rates, making homeownership less accessible for low-income borrowers. Vice President Kamala Harris has previously indicated that the transition could add approximately $1,200 annually to the typical mortgage payment, a concern that resonates amid rising mortgage rates [098f9521][1d6cdbb1].
Economists Jim Parrott and Mark Zandi have projected that privatization could raise 30-year mortgage rates by between 0.43% and 0.97%, translating to an additional cost of $730 to $1,670 per year for homeowners [098f9521]. While some, like hedge fund manager Bill Ackman, support the idea of privatization, suggesting it could relieve the companies from conservatorship, critics remain wary of the potential for increased volatility in the housing market [1d6cdbb1].
Despite the optimism surrounding privatization, concerns persist regarding the stability of the housing market and the potential loss of government guarantees that have historically provided a safety net for borrowers [098f9521]. As the nation approaches the 2028 deadline, the debate surrounding the future of Fannie Mae and Freddie Mac will be pivotal in shaping the mortgage landscape and influencing voter sentiment in upcoming elections [1d6cdbb1].