- President Donald Trump is considering taking Fannie Mae and Freddie Mac public, ending over 16 years of government control.
- A public offering could raise up to $382B, possibly becoming one of the largest IPOs in history.
- Experts warn that weakening the government guarantee could increase mortgage rates and affect affordability.
Back in the Spotlight
According to Bloomberg, President Trump has renewed efforts to pursue Fannie privatization and release Freddie Mac from government control. On Truth Social, he said he’s giving “very serious consideration” to ending their government conservatorship, which began during the 2008 financial crisis.
Market Reaction
Shares of both companies soared after Trump’s post. Fannie Mae jumped 38%, while Freddie Mac rose 34%. Investors, including hedge fund manager Bill Ackman, have long advocated for Fannie privatization and the release of both entities from conservatorship. Ackman predicts the government could profit by as much as $300B.
What’s at Stake
Fannie Mae and Freddie Mac support nearly half of all US mortgages. They buy and guarantee mortgage-backed securities. Despite returning to profitability, their path to privatization raises key questions—like the level of government backing and treatment of existing shareholders.
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Administration’s Strategy
Trump said he will consult Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and FHFA Director Bill Pulte. Pulte has stressed the need for a careful plan that avoids disruption in the housing market. He said any release should not put pressure on mortgage rates.
Why It Matters
Supporters say privatization could cut the federal deficit and make the firms more efficient. But critics worry. If the government guarantee weakens, investors may demand higher yields. That could push mortgage rates up by 0.5% or more. Today’s average 30-year mortgage rate is 6.81%, according to Freddie Mac.
What’s Next
A successful public offering would take time and likely need bipartisan support. The administration can begin the process, but final execution depends on market conditions and government decisions.
Looking Ahead
A successful Fannie privatization, along with Freddie Mac’s release, would mark one of the largest restructurings in US housing finance history. Investors and lawmakers are now watching closely for updates from key officials like Bessent and Pulte.
