Homeowners and buyers are waiting anxiously to see how economic and political developments impact the housing market and mortgage rates
A report last month suggesting cuts at Fannie Mae and Freddie Mac could hinder the US housing market’s recovery drew stinging criticism from the Trump administration, with a Federal Housing Finance Agency (FHFA) spokesperson touting the “great robust affordability programs” still offered by the government-sponsored entities (GSEs).
But that Bloomberg Intelligence analysis, which arrived amid a worsening affordability outlook across the US marked by rising homeownership costs, a supply shortage and increasingly cost-burdened renters, said rolling back affordability support and downpayment assistance could negatively impact the GSEs’ effectiveness in helping homebuyers.
This week, Treasury secretary Scott Bessent – a reported contender to replace Jerome Powell as Federal Reserve chair next year – said mortgage costs, alongside “cars and real wage gains” were among the president’s key priorities on the economic front.
Still, homeowners and buyers face an anxious wait to see whether that approach, which includes a wave of tariffs against global trading partners, will translate into lower mortgage costs and improved housing affordability.
Affordability outlook hinges in large part on GSEs’ future
With Trump keen to push ahead with ending the conservatorship of Fannie and Freddie, much will depend on what the new reality looks like at the mortgage giants after they’re released into the wild.
Both Trump and FHFA director Bill Pulte have suggested the president will retain oversight and an implicit guarantee over the GSEs even if they go public after nearly 17 years under majority government control.
That may be an effort to dispel the idea that mortgage costs could jump if the US government steps away from Fannie and Freddie completely and investors demand higher yields with the end of that safety net.
Vice President JD Vance intensified his criticism of Federal Reserve Chair Jerome Powell this week, calling for immediate interest rate cuts and accused the central bank of harming working Americans.https://t.co/gAa67MIWOC
— Mortgage Professional America Magazine (@MPAMagazineUS) June 12, 2025
While the government has already administered sweeping cuts to housing programs at Fannie and Freddie in recent months, mortgage lawyer Marty Green (pictured below) of Polunsky Beitel Green told Mortgage Professional America the question of whether further affordable housing measures could be on the chopping block is an important one.
“There are affordable housing goals that are part of what [Fannie and Freddie’s] mission is,” he said, “and whether or not those continue is one of the things that I’m keeping an eye on – whether the administration may not be as keen on those continuing. They may see those as being too costly or as not being something that they want to foster.
“So that’s an area where I think you could see some change – and are there going to be changes in terms of the product mix or the underwriting criteria that Fannie and Freddie have exercised over the last 17 years under conservatorship?”
It remains unclear what kind of corporate ownership has been mooted for those entities and how much ownership interest the government will have if conservatorship ends.
That could prove an important factor in their direction, and whether lending appetite and credit availability rise or fall in the years ahead.
“One way that the government could retain some control of [the GSEs] is to keep a sufficient number of shares so that they control the board of directors for the two entities,” Green said, “so they could go ahead and facilitate a lot of the changes that they want to make with respect to the charters or other things [related] to how the GSEs operate.”
The cases for and against an imminent end to conservatorship
In December, Mortgage Bankers Association (MBA) senior vice president and chief economist Mike Fratantoni highlighted potential benefits to the mortgage market of bringing Fannie and Freddie out of conservatorship, including an end to sometimes “frustrating” government intervention in the GSEs.
“When you’re dealing with another business, sometimes there can be a sort of market sensitivity and responsiveness that’s [often] just not there with a government organization, which necessarily acts at a more methodical pace,” he told MPA.
But a letter from senior Democratic lawmakers led by Senator Elizabeth Warren last week urged the Trump administration to pause its plans to release the GSEs, citing potential risks to housing affordability.
If not planned well enough, more than a dozen Senators said in a letter, changes at Fannie and Freddie could see costs “dramatically increase” for families hoping to purchase a home and “[make] the housing crisis even worse.”
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