By the Numbers
No news on housing may be good news from Davos
This material is a Marketing Communication and does not constitute Independent Investment Research.
After a week or more of trying to anticipate changes to housing policy that the Trump administration said would come in the president’s speech at Davos, the results turned out to be less than dramatic. The president reiterated his interest in banning large institutional investors from buying single-family homes and repeated his January 8 call for Fannie Mae and Freddie Mac to buy $200 billion in MBS. Arguably more noticeable was the absence of calls for other changes in policy. But the news from Davos does not mean an end to MBS policy risk.
The only new wrinkle around US housing policy was the president’s apparently limited interest in anything that might hurt home prices. That suggests limits to significantly increasing housing supply by trying to streamline local zoning or building codes, creating incentives for builders or even selling government land for housing.
“Every time you make it more affordable for someone to buy a house cheaply,” he said, “it hurts people who already own a house.” The president said he wanted to protect people that already own a home.
He highlighted instead an executive order reported earlier this month and signed the day before his speech to stop large institutional investors from buying single-family homes. It instructs the Treasury Secretary to define “large institutional investor” and “single-family home” with 30 days. It also asks Congress to put the policy into law.
The definition of large institutional investors could matter for some local housing markets. Portfolios that own more than 1,000 homes bought 11.4% of homes for sale in Atlanta in the first half of 2025, for example, 6.7% of homes in Memphis and 5.8% of homes in Los Angeles. Nationally, portfolios of that size bought only 2% of homes for sale in the first half of last year.
The president also mentioned his interest in having Fannie Mae and Freddie Mac buy up to $200 billion in MBS, an action first reported January 8. Option-adjusted spreads on MBS, the clearest metric for measuring the balance between MBS supply and demand, have since tightened 9 bp. Work from the Federal Reserve on the impact of QE on MBS yields suggests this kind of tightening fully prices the incremental demand.
Noticeable was the absence of other possible policy actions that circulated among investors ahead of Davos:
- Cutting the mortgage insurance premiums paid by borrowers guaranteed by the Federal Housing Administration
- Cutting the fees paid at origination, the loan level price adjustments, by borrowers backed by Fannie Mae and Freddie Mac
- Streamlining other costs to refinancing loans backed by Fannie Mae and Freddie Mac
- Allowing draws from 401(k) accounts to make down payments on new homes
Those did not get mentions. And in fact, the president suggested in the days after his speech that he particularly did not like the 401(k) proposal.
The results from Davos do not end policy risk in MBS. The fact that housing had a place in the Davos speech points to the administration’s focus on ways to lower the cost of housing. The easiest tools, including lower mortgage insurance premiums and LLPAs, would lower mortgage costs. That would make current outstanding MBS more refinanceable, with its biggest impact on pools trading around par. As the November 3 elections approach, the temptation to pull those policy levers may grow.
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