White House National Economic Council Director Kevin Hassett joins ‘Mornings with Maria’ to outline President Donald Trump’s sweeping affordability agenda aimed at lowering mortgage rates, cutting credit card interest and boosting economic growth.
As the Trump administration has put housing affordability in the spotlight recently, one of the president’s top economic advisors unveiled how Americans might be able to use 401(k) funds for a home down payment.
“The typical monthly payment about doubled for an ordinary family buying an ordinary home. And the down payment they needed to buy a home went from about $15,000, to about $32,000. And so there’s a real lot of room to make up,” National Economic Council Director Kevin Hassett told FOX Business’ Maria Bartiromo.
“We’ve got a whole bunch of policies that are going to help people do that,” he continued. “The one you didn’t mention that we’re also talking about, and the president will put the final plan out in Davos next week, I’ll be flying up there with him, is that we’re going to allow people to take money out of their 401(k)s and use that for a down payment.”
White House Economic Council Director Kevin Hassett teased a new way Americans may tap their 401(k)s for home down payments. (Getty Images / Getty Images)
Hassett was discussing Trump’s renewed proposal to direct his representatives to buy $200 billion in mortgage-backed securities, a move he claims would help drive down interest rates.
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“Biden ignored the Housing Market, and instead was immersed with High Crime, Open Borders, runaway INFLATION, the Afghanistan Disaster, and a Military that he left in Chaos and Confusion,” Trump wrote on Truth Social last Thursday. “Everything was broken, but I, as President of the United States, have already fixed it!”
“Now, I am giving special attention to the Housing Market. Because I chose not to sell Fannie Mae and Freddie Mac in my First Term, a truly great decision, and against the advice of the ‘experts,’ it is now worth many times that amount — AN ABSOLUTE FORTUNE — and has $200 BILLION DOLLARS IN CASH,” he continued. “Because of this, I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS. This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable.”
When asked whether he had concerns about tapping 401(k)s and hurting savers later in retirement, Hassett downplayed those concerns.
White House National Economic Council Director Kevin Hassett argues that President Donald Trump has shown the world ‘smart economic policy’ on ‘Kudlow.’
“What you have to do is come up with a way, so, a simple way. We’re still talking about the mechanics of it, but suppose that you put 10% down on a home, and then you take 10% of the equity of the home, and put it in as an asset in your 401(k), then your 401(k) will grow over time,” he explained.
“As the value of your house grows, you’ll be healthy, have more money for retirement,” Hassett argued, “and you’ll have solved the liquidity constraint problem and got yourself a house early in life.”
Typically, Americans cannot withdraw funds from a 401(k) for a first-time home purchase without paying a penalty.
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PMG Affordable principal Dan Coakley speaks to Fox News Digital about what it may take to making housing affordable again across the country.
While there is a “first-time homebuyer exception” allowing penalty-free withdrawals from IRAs, it does not apply to 401(k) plans. Those who take a direct withdrawal before age 59½ typically owe a 10% early withdrawal penalty plus ordinary income taxes, according to NerdWallet.
However, Bankrate notes that a more common strategy to access 401(k) funds without penalties is taking a loan rather than a withdrawal.
