Billionaire hedge fund manager Bill Ackman has an interesting pitch for how to make mortgages cheaper: make them harder to escape. In a post on X over the weekend, Ackman suggested to President Donald Trump and Treasury Secretary Scott Bessent that government-backed mortgages should come with prepayment penalties, potentially saving borrowers 65 basis points on a 30-year loan.

The Prepayment Penalty Proposition

Here's the basic logic: Ackman wants Federal National Mortgage Association (FNMA), better known as Fannie Mae, and Federal Home Loan Mortgage Corp. (FMCC), aka Freddie Mac, to offer non-prepayable mortgages. If borrowers want to pay off their loan early or refinance, they'd face a penalty.

According to Ackman, who runs Pershing Square Holdings and happens to be the largest common shareholder of both mortgage finance giants, this arrangement could drop rates from today's roughly 6% down to about 5.35%. As he framed it on X: "Obtain a 30-year prepayable mortgage at today's ~6% rate, or at a 5.35% rate. While the ability to prepay is a valuable option, 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."

Ackman even floated variations on the concept, with different lockout periods and corresponding savings levels, giving borrowers options based on how long they plan to stay put.

Why This Matters Now

The timing isn't random. Mortgage rates have been a persistent headache, and Trump just announced last Thursday that Fannie Mae and Freddie Mac would purchase $200 billion in mortgage-backed securities to push rates lower. That move actually worked—the average 30-year fixed rate dropped below 6% for the first time since 2022.

Ackman has been vocal about restructuring the mortgage market for a while now. Earlier in 2025, he suggested merging Fannie Mae and Freddie Mac entirely to reduce the risk of widening mortgage spreads and unlock shareholder value. In November, he unveiled a restructuring proposal that venture capitalist Peter Schiff promptly slammed as "fake privatization" designed to benefit hedge funds while leaving taxpayers holding the bag.

So yes, Ackman has some skin in this game. Whether his latest idea gains traction with the Trump administration remains to be seen, but it's certainly stirring the conversation about how to make homeownership more affordable without simply throwing more money at the problem.