Billionaire Hedge Fund Manager Bill Ackman has called on President Donald Trump and Treasury Secretary Scott Bessent to introduce “non-prepayable” 30‑year loans through Fannie Mae and Freddie Mac, saying that investors in mortgage‑backed securities demand extra yield to compensate for today’s no‑penalty structure.
His request for the GSEs to offer new government‑backed mortgages with prepayment penalties puts a spotlight on how much United States borrowers have paid for the right to refinance at will. The social media post also was addressed to Federal Housing Director Bill Pulte.
“One of the unique features of U.S. conventional mortgages is that they are prepayable at any time without a penalty,” Ackman, the Pershing Square chief investor, wrote in a weekend post on X addressed to Trump and Bessent. “While this feature is attractive for homeowners, it comes at a significant cost as buyers of mortgage backed securities (MBS) require a significant increase in spread to compensate them for giving the borrower the option to prepay at anytime.”
Ackman said an MBS investor has estimated that moving to a structure that has penalties could cut the rate on a standard 30‑year Fannie or Freddie loan by about 65 basis points. He said that would give borrowers a choice to “obtain a 30-year prepayable mortgage at today’s ~6% rate, or at a 5.35% rate, but with the obligation to pay a prepayment penalty if he/she refinanced in the future.”
Ackman added that “locking in the 65 bps savings upfront over the life of the mortgage may be the difference between the borrower being able to afford the home and not being able to.”
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He also floated variants with five‑ or 10‑year “lockout” periods and he suggested making the loans portable so that “if the home is sold, the new borrower could assume the loan and no prepayment penalty would be owed on a sale.”
The proposal comes after Trump’s directive last week for Fannie and Freddie to purchase $200 billion of mortgage‑backed securities. The move helped pull average 30‑year rates below 6% for the first time since 2022.
That spreads in the secondary market already have tightened by roughly 50 basis points in recent months, including about 20 basis points on the day the plan was announced, as GSE bond buying pushed MBS yields closer to Treasurys.
Industry lawyers and policy specialists earlier warned that any step seen as weakening the implicit government backstop for the GSEs risked forcing spreads wider and pushing mortgage rates higher.
Ackman’s plan keeps Freddie and Fannie at the center of the market while shifting more interest‑rate risk to borrowers via penalties.
Supporters of the Ackman’s idea said that removing borrowers’ free option to refinance could compress MBS spreads by as much as 100 basis points over time, and potentially would amplify the rate savings that Ackman highlighted.
Critics said there’s a risk of trapping households in higher‑rate loans during future downturns or life changes, despite the appeal of lower upfront pricing.
