Billionaire Bill Ackman floats bold fix for the housing market crisis originally appeared on TheStreet.
America’s housing market is caught between a rock and a hard place.
Sky-high prices and punishing mortgage rates have weighed down the housing market, but billionaire Bill Ackman thinks he’s found a way out.
Shop Top Mortgage Rates
Powered by Money.com – Yahoo may earn commission from the links above.
His dramatic proposal may seem radical, but it is likely to cut costs, simplify oversight, and substantially reduce borrowing rates for millions.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter💰💵
To be fair, his proposal echoes past reform pushes, but the scale and timing make it unlike anything we’ve heard in years.
Unsurprisingly, the skeptics warn of new risks and political landmines, but either way, it’s a proposal that has the potential to ripple through the housing market for decades.
Bill Ackman is calling for a merger of housing finance giants Fannie Mae and Freddie Mac.Image sourrce: Goodney/Bloomberg via Getty Images
The U.S. housing market rolled into 2025 carrying the same baggage as last year.
Mortgage costs dropped from late-2024 peaks but still remain elevated, with the 30-year fixed averaging at 6.63%. That’s naturally kept multiple would-be sellers on the sidelines, while impacting buyer affordability.
Related: ChatGPT maker quietly shakes the AI landscape and Elon Musk’s xAI
Inventory is creeping higher, but demand still remains scarce.
June existing-home sales dropped 2.7% month-over-month, despite median prices hitting a record $435,300.
To make matters worse, builders aren’t plugging the gap with single-family housing starts slipping to an annualized pace of 883,000 units in June.
On the flipside, builder sentiment, measured by the National Association of Home Builders Housing Market Index, is deeply in the negative at 33, hampered by costly financing and materials.
On the rental end, new multifamily supply has weighed down asking rents, especially for older, more affordable units.
Nationally, rents are flat year-over-year, offering some relief from inflationary pressures, but that hasn’t made homeownership any easier.
Maverick investor Bill Ackman just revealed arguably the boldest housing market proposals in years.
In a post on X (formerly Twitter) this past weekend, he advocates merging Fannie Mae and Freddie Mac, then taking the combined mortgage giant public.
Related: Surprising AI chip stock is up 90% in 30 days (and still climbing)
His idea comes as the Trump administration reportedly weighs IPOs for the government-sponsored enterprises (GSEs), potentially valuing them near the $500 billion region.
Ackman feels that a single platform will cut costs and streamline oversight while lowering mortgage rates.
These GSEs purchase mortgages from lenders, package them into mortgage-backed securities (MBS), and then sell them to investors.
This cycle efficiently recycles capital back to lenders so they can continue making loans.
These entities have been under federal conservatorship since the 2008 financial crisis and have proven to be critical in keeping the 30-year fixed-rate mortgage widely available.
With that said, it’s imperative to assess the potential impacts of a merger/IPO, of which some include:
Rates & g-fees: Cost savings will only lower mortgage rates if the merged entities capital requirements and profit goals facilitate it. The Urban Institute estimates the guarantee fees (“g-fees”) could potentially change by 10–25 basis points with just a few tweaks to these assumptions. However, IPO uncertainty will likely cause mortgage-backed securities (MBS) spreads to widen for a while, pushing borrowing costs up in the near-term.
Liquidity: Since 2019, both GSEs have already issued a single “Uniform MBS” in pooling liquidity, so merger-related gains may likely be a lot smaller than the headlines show.
Market structure & risk: Merging into a uniform (GSE) will effectively club the operational and financial risk in a single place. Hence, if something goes wrong, the entire housing finance system might be affected. Consequently, the Federal Housing Finance Agency (FHFA) and the Treasury will need to step in and efficiently balance keeping mortgages affordable while meeting shareholder profit goals.
More News:
Of course, with mortgage rates around 6.63% straining affordability, even modest g-fee relief could help at the margin. However, it’s unlikely to solve inventory shortages or macro headwinds, which is why the FHFA/Treasury need a detailed plan of action.
Over the weekend, President Donald Trump tossed gasoline on the housing finance debate, floating an idea that is right up Bill Ackman’s alley.
Trump floated the idea of folding Fannie Mae and Freddie Mac into a single, publicly traded “MAGA” giant.
To be fair, it’s not the first time D.C. has discussed the idea of a sweeping GSE overhaul. Back in 2019, Trump’s Treasury wanted to take Fannie Mae and Freddie Mac out of government control and rebuild their finances.
However, the talk didn’t dovetail into potentially merging the two GSEs. Outside of Washington, though, the idea has crept up on multiple occasions.
Earlier in April, University of Maryland professor Clifford Rossi suggested that merging the two entities before making them private could cut costs and significantly reduce the risk of a system-wide failure.
Similar “one combined company” plans were also suggested by major think tanks as far back as 2016.
Billionaire Bill Ackman floats bold fix for the housing market crisis first appeared on TheStreet on Aug 11, 2025
This story was originally reported by TheStreet on Aug 11, 2025, where it first appeared.
