President has limited tools to unilaterally help with housing affordability: PIMCO's Cantrill

Summary

Libby Cantrill, PIMCO's head of public policy, discusses housing affordability policy and the role of Fannie Mae and Freddie Mac. She expects the GSEs to expand mortgage purchases and sees mortgage rates below 6% and potentially materially lower if the Fed also keeps its mortgage exposure constant. She says using the GSEs for policy goals complicates any public listing, and that without privatization their profits accrue to taxpayers rather than shareholders. The segment also touches on tariff policy, but the transcript is truncated.

• Libby Cantrill of PIMCO discusses housing affordability policy and Fannie Mae/Freddie Mac.
• Fannie and Freddie have already bought about $65 billion of mortgages over five months and could expand further within balance-sheet caps.
• Cantrill expects mortgage rates to fall below 6% and potentially materially lower.
• A Fed policy change to keep mortgage exposure constant would effectively be buying mortgages.
• GSE public listing or privatization becomes more difficult if they are used for policy goals.
• High-quality mortgage originations and profitable GSEs mean taxpayer risk differs from pre-GFC subprime fears.
• Tariff policy is mentioned at the open, but the transcript is truncated.