U.S. President Donald Trump has expressed reservations about a proposal from advisers, particularly National Economic Council director Kevin Hassett, to allow Americans to use 401(k) retirement savings for a home down payment.
Speaking to reporters, Trump said: “I’m not a huge fan. Other people like it.” He noted that “401(k)s are doing much better than the housing market.”
Trump was expected to unveil plans at Davos, but instead, his speech highlighted barriers to homeownership and a call on Congress to cap credit card interest rates at 10 per cent for one year to help people save for a deposit.
In his Davos speech, the President said: “Home ownership has always been a symbol of health and vigour of American society, but that goal fell out of reach for millions and millions of people in the Biden era because interest rates went up so high.”
Trump said high levels of credit card debt had become one of the biggest obstacles preventing Americans from saving for a home deposit, arguing that steep interest rates were eroding household finances.
He said credit card companies were operating with profit margins of more than 50 per cent and charging interest rates of close to 30 per cent, which he described as excessive. Trump said many consumers were unaware of how quickly those charges accumulated, particularly if payments were late.
Trump called on Congress to cap credit card interest rates at 10 per cent for one year, arguing the move would help millions of Americans save toward homeownership. He framed the proposal as part of a broader effort to ease financial pressures on households following what he described as economic damage under the Biden administration.
Prior to Davos, Hassett previewed plans that would allow individuals to draw on their 401(k) savings for a home deposit, while counting the equity in that property as an asset within their retirement account.
The proposal was intended to prevent first-time buyers from falling behind on retirement planning as they purchased a home. Details on the timeline for implementation had not been confirmed, though further announcements were expected during the Davos meetings.
Hassett said the proposal was one of four or five options under consideration to give Americans greater access to their 401(k) savings, stressing that the President had not yet made a final decision.
Hassett said the President believed falling homeownership rates, particularly among people aged 30 to 40, were being driven in part by the rising cost of down payments, which he said had increased from around $17,000 to $35,000 in recent years.
Hassett said that while many workers had built up savings in their 401(k) plans, including through employer-matched contributions, withdrawing those funds currently triggered taxes and penalties that significantly reduced their value. He said the President believed removing those penalties could help free up cash for prospective homebuyers.
Hassett added that the issue was expected to form a key part of the administration’s housing agenda, with technical details still under development.
He said: “The general idea the President has put forward, helping people access their own cash without heavy tax penalties, is something we’ve been socialising in both the Senate and the House, and we’ve seen strong enthusiasm for it.”
Hassett added: “We expect to try to move legislation forward this year, and it could even be bipartisan, because it’s a no-brainer for Americans to be able to access their own money so they can finally become homeowners.”
