Trump’s Fannie & Freddie IPO Plan Faces Senate Backlash: Mortgage Rates Set to Surge?

Senate Democrats sound alarm over proposed privatization—warning homeowners to brace for impact.

The Rate Hike Threat

Legislators argue that taking these mortgage giants public would remove government backing, forcing them to borrow at higher rates. Those costs get passed directly to consumers—just another financial innovation that somehow makes everything more expensive for Main Street.

Political Standoff Brewing

The administration's push for private ownership clashes with housing advocates who fear reduced affordability. Because nothing says 'economic progress' like making it harder for families to buy homes while Wall Street collects fees on the IPO.

Market Uncertainty Looms

Banking analysts predict volatility in housing finance stocks if the move advances. Yet another brilliant plan to inject uncertainty into the one market that actually affects everyday Americans' financial stability.

Elevate Your Investing Strategy:

• Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.

On Friday, the three senators sent a letter to Federal Housing Finance Agency (FHFA) Director Bill Pulte, urging him to center his effort on housing affordability rather than other areas, such as filing criminal referrals against Fed Governor Lisa Cook. The 30-year fixed-rate mortgage sits at a 10-month low of 6.56% but still remains elevated when compared to recent years, locking prospective buyers out of the market.

Privatizing Fannie and Freddie May Push Mortgage Rates Higher

Right now, if Fannie and Freddie were to experience financial difficulties, the government could step in and provide support. That safety net makes lending to the two government-sponsored entities (GSEs) safer, allowing them to borrow money cheaply while keeping mortgage rates lower.

If Fannie and Freddie were to be privatized, mortgage rates could drift higher if investors believe the government WOULD no longer bail them out. In other words, investors would require a higher return for increased risk, which could equate to a higher mortgage rate.