Trump to unveil home buying plan involving retirement funds

US President Donald Trump is set to announce a plan that would let Americans use their retirement savings for down payments on homes.

National Economic Council Director Kevin Hassett, who hinted at the plan on Friday, offered few details about how withdrawals from US workplace retirement accounts - known as 401(k)s - would work.

"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," Hassett said on Fox Business.

Trump will present a "final plan" at the Davos World Economic Forum next week, he added.

The White House did not immediately respond to a request for comment on the upcoming proposal, including the tax implications. Currently, employees who opt to withdraw money from retirement accounts typically incur fees and taxes.

The anticipated 401(k) plan is the latest in a slew of recent housing affordability proposals as Trump's administration faces growing public pessimism about its handling of the economy.

Home affordability remains high on the list of Americans' concerns. Trump has in recent weeks sought to allay voter anxiety ahead of midterm elections later this year, announcing a series of proposals aimed at addressing the high cost of housing.

Last week, Trump has said he will move to ban big corporate investors from buying single-family homes, in a bid to make housing more affordable for Americans. That pledge bolstered an idea that has been circulating for years, though some analysts question the extent to which a ban would affect prices.

Trump also recently directed Fannie Mae and Freddie Mac, the government-backed housing finance firms, to buy $200bn (£149.4bn) worth of mortgage bonds.

The average rate on a 30-year mortgage fell below 6% for the first time in nearly three years following his announcement - "and that's not with the help of the Fed," Trump said during a speech in Michigan this week, referring to the Federal Reserve. The Fed's benchmark interest rate can indirectly affect mortgage rates.

Hassett on Friday promoted Trump's move to order bond purchases. "We've seen a pretty big reaction to the announcement, and I think that actually makes us all feel better, because the truth is that fewer people are buying homes right now than we've seen pretty much in my lifetime," he said.

But housing economists have cautioned that the bond purchases might not push mortgage rates substantially lower in the long run.

"The key now is the timing and cadence of these purchases, which will determine whether the impact is healthy or introduces volatility into the mortgage market," said Jeff DerGurahian, head economist at loanDepot, a mortgage lender.