White House economic advisor Kevin Hassett said the Trump administration plans to allow investors to use retirement funds to make a down payment on a house.
This is part of the administration's plan to make housing more affordable for the average family.
“We're going to allow people to take money out of their 401(k)s and use that for a down payment,” he told Fox News.
Hassett also said that President Donald Trump is set to put the “final plan out in Davos next week”.
In his interview with Fox News, Hassett also downplayed concerns that tapping into the 401(k) will hurt savers later in retirement.
“We're still talking about the mechanics of it, but 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," he said.
"As the value of your house grows, you'll be healthy and have more money for retirement.”
Typically, Americans cannot withdraw funds from a 401(k) for a first-time home purchase without paying a penalty.
The move represents a part of the Republicans' push to increase housing affordability.
Recently, Trump directed representatives to buy US$200 billion in mortgage bonds in a bid to drive rates and monthly payments down.
Trump has also repeatedly called for the U.S. Federal Reserve to lower its benchmark rates.
Consumer inflation data released by the Bureau of Labor Statistics this week showed housing inflation remained strong.
As the Trump administration strives to push housing prices down, analysts insist that a key issue is a lack of supply and that zoning and regulation could have a bigger impact.
Analysts argue that lowering rates could increase demand for homes, and without more supply, this would likely push prices higher.
