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News  ›  Benzinga

Top Economist Rebuts Trump: $200 Billion Housing Stimulus Via Fannie, Freddie Will Spike Prices, Not Restore 'Affordability'

Benzinga Logo Benzinga By Rishabh Mishra
Top Economist Rebuts Trump: $200 Billion Housing Stimulus Via Fannie, Freddie Will Spike Prices, Not Restore 'Affordability'

Moody's Chief Economist Mark Zandi warns that President Trump's $200 billion directive for Fannie Mae and Freddie Mac to purchase mortgage bonds will likely increase home prices rather than improve affordability. Zandi argues the stimulus ignores the severe housing shortage and will bid up limited inventory, negating benefits from lower mortgage rates. He also criticizes the move as a 'backdoor' way to circumvent Federal Reserve monetary policy control and warns it erodes post-2008 financial crisis safeguards.

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Economist warns that Trump's directive for Fannie Mae to purchase $200 billion in mortgage bonds will backfire by spiking home prices rather than improving affordability. The expansion of balance sheets is criticized as eroding post-2008 crisis constraints and returning to a risky pre-crisis model.