Billionaire hedge fund manager Bill Ackman’s call for Fannie Mae and Freddie Mac to offer new government‑backed mortgages with prepayment penalties put a spotlight on how much United States borrowers have paid for the right to refinance at will.

The Pershing Square chief investor urged president Donald Trump and Treasury secretary Scott Bessent to introduce “non-prepayable” 30‑year loans through the government‑sponsored enterprises (GSEs), arguing that investors in mortgage‑backed securities demand extra yield to compensate for today’s no‑penalty structure.

Ackman’s trade‑off: flexibility vs price

“One of the unique features of U.S. conventional mortgages is that they are prepayable at any time without a penalty,” Ackman wrote in a weekend post on X addressed to Trump and Bessent.

“While this feature is attractive for homeowners, it comes at a significant cost as buyers of mortgage backed securities (‘MBS’) require a significant increase in spread to compensate them for giving the borrower the option to prepay at anytime.”

He said an MBS investor has estimated that shifting to a structure with penalties could cut the rate on a standard 30‑year Fannie or Freddie loan by about 65 basis points, giving borrowers a choice to “obtain a 30-year prepayable mortgage at today’s ~6% rate, or at a 5.35% rate, but with the obligation to pay a prepayment penalty if he/she refinanced in the future.”

Ackman added that “locking in the 65 bps savings upfront over the life of the mortgage may be the difference between the borrower being able to afford the home and not being able to.”

He also floated variants with five‑ or ten‑year “lockout” periods and suggested making the loans portable so that “if the home is sold, the new borrower could assume the loan and no prepayment penalty would be owed on a sale.”

President @realDonaldTrump and @SecScottBessent, and @pulte, I have a simple idea on how to lower mortgage rates and spreads:

One of the unique features of U.S. conventional mortgages is that they are prepayable at any time without a penalty.

While this feature is attractive…

— Bill Ackman (@BillAckman) January 10, 2026

Trump bond‑buying move already pushed rates lower

Ackman’s proposal followed Trump’s directive for Fannie and Freddie to purchase $200 billion of mortgage‑backed securities, a move that helped pull average 30‑year rates below 6% for the first time since 2022.

Mortgage spreads in the secondary market have already tightened by about 50 basis points in recent months, including roughly 20 basis points on the day the plan was announced, as GSE bond buying pushed MBS yields closer to Treasurys.

Industry lawyers and policy specialists have earlier warned that any step seen as weakening the implicit government backstop for Fannie and Freddie risked forcing spreads wider and pushing mortgage rates higher.

Ackman’s plan, by contrast, keep the GSEs at the center of the market while shifting more interest‑rate risk back to borrowers through penalties.

Supporters of the idea argued that removing borrowers’ free option to refinance could compress MBS spreads by as much as 100 basis points over time, potentially amplifying the rate savings that Ackman highlighted.

Critics pointed to the risk of trapping households in higher‑rate loans during future downturns or life changes, despite the appeal of lower upfront pricing.

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