Affordability is emerging as the defining economic challenge facing the next Congress and housing sits squarely at the center of the affordability problem. For younger families in particular, the gap between incomes and home prices has turned what once felt achievable into something perpetually out of reach.
That is why the Trump administration’s focus on housing supply matters. Streamlining permitting, pushing back against exclusionary zoning, and making homebuilding a national priority are the right moves. Bill Pulte, the director of Federal Housing Finance Agency, has kept the focus where it belongs: housing won’t get cheaper until America builds more homes.
Yet one proposal gaining traction threatens to undermine that progress — a federal cap on credit card interest rates. The idea is being marketed as consumer relief. In reality, it would negative consequences not just for those trying to get a credit card but also those looking to get a mortgage. Credit cards are not merely a convenience for discretionary spending. For millions of Americans, they are the primary way credit histories are built and maintained. Mortgage lenders do not assess borrowers on income alone. They look closely at credit scores, available credit, and repayment patterns. When those other measures of credit worthiness worsen, borrowing costs rise.
A government-imposed rate cap would set that process in motion. Faced with an artificial ceiling on pricing, credit card lenders would do what they always when credit risk cannot be priced properly: extend less credit in the form of fewer credit cards and smaller credit lines. That is the predictable result of price controls, regardless of sector. With less available credit, credit utilization ratios rise and people lose the chance to build a credit history. The consequence is that credit scores slip. And when scores fall, mortgage rates move in the wrong direction.
For a young couple trying to buy their first home, a modest increase in mortgage rates can determine whether they qualify at all. And even if the couple does qualify, the difference in mortgage rates between someone with excellent credit and just OK credit can mean tens of thousands of dollars in additional interest over the life of a loan. This makes housing less affordable - not because of zoning regulations or construction costs, but because Washington quietly weakened the financial foundation of homeownership.
The irony is that the people who would be least affected by an interest rate cap on credit cards are affluent borrowers who pay off their balances every month and don’t need to worry about qualifying for a mortgage in the first place. The real costs would fall on younger households still establishing credit, families recovering from financial setbacks, and working-class buyers trying to move from renting to owning - the same Americans housing reform is supposed to help.
Supporters of the cap often argue that financial institutions can absorb the cost. That misunderstands how competitive lending works. Risk does not disappear because lawmakers wish it away. When it cannot be priced, credit is rationed - and rationing always hits marginal borrowers first.
Adopting a credit card rate cap as a policy shortcut also puts Congress on a slippery slope. Today it is credit cards. Tomorrow it could be auto loans. And then why not just put a cap on mortgage rates directly?
None of this denies Americans’ real frustration with high interest rates on not just credit cards but mortgages, auto loans, and so on. That frustration is understandable, but conservatives have long argued that markets work best when prices reflect real riskand when government clears obstacles instead of imposing blunt controls that warp incentives. Now is not the time to forget the sad history of price controls and reach for a quick fix.
The answer to high housing costs is simple: build more houses. The Trump administration has a real opportunity to keep housing reform on a serious, supply-driven track. Listening to voices like Pulte on how to increase production is part of that. Just as important is resisting policies like a cap on credit card rates that might sound good but only serve to make the dream of homeownership harder to reach.
