Inside Year One: Finance Developments Under A New Administration

This article is part of Inside Year One: Key Developments Under A New Administration. Click here to read the full newsletter.

A year into President Trump's second term, policy signals from Washington are increasingly influencing capital allocation, underwriting assumptions, and sector-level opportunity. The Administration's signature tax-and-spending package—H.R. 1, commonly referred to as the One Big Beautiful Bill Act (OBBBA), signed on July 4—has reshaped the outlook for after-tax ROI across industries, with a mix of extensions and revisions to prior tax policy and a rebalancing of incentives, including changes affecting energy and other project finance economics.

On the financial services front, the direction has been toward a lighter regulatory footprint and a recalibration of supervisory priorities, with potential implications for bank capital and liquidity expectations, consumer finance enforcement, and overall credit availability. At the same time, markets remain sensitive to the intersecting forces of fiscal policy, inflation, and the Federal Reserve's function, particularly as policy messaging continues to emphasize affordability and the cost of capital.

Housing Finance Focus

Housing is an increasingly explicit focus of the Trump administration's affordability agenda, likely a meaningful driver of credit volumes in 2026. Recent steps have included directing the Federal Housing Finance Agency (FHFA) to facilitate $200 billion of mortgage-backed securities (MBS) purchases through Fannie Mae and Freddie Mac, an effort described as intended to offset the effect of the Federal Reserve's MBS runoff and, at the margin, narrow MBS spreads that feed into mortgage rates. In parallel, the FHFA increased the 2026 conforming loan limit to $832,750 for most one-unit properties, expanding the "conforming" universe and supporting the agencies' addressable market. On the multifamily side, the FHFA set 2026 agency multifamily purchase caps at $88 billion per enterprise (a combined $176 billion), signaling continued capacity for agency lending in that segment, as well.

These policy tailwinds align with industry forecasts calling for a step-up in mortgage activity in 2026, driven by both purchase demand and an expected pickup in refinance volume as rates ease. Recent market forecasts point toward higher total origination volumes in 2026 than in 2025, implying higher expected delivery/guarantee volumes for Fannie Mae and Freddie Mac relative to the prior year.

In the real economy, the Administration's emphasis on manufacturing, onshoring, and "strategic infrastructure" is steering investment, including foreign investment, toward industrial and logistics assets, particularly power-intensive projects, such as data centers and AI computers. A related push to accelerate federal permitting for large-scale data center infrastructure is intended to shorten development timelines and reduce execution risk.

Countervailing pressures remain. Tariff policy continues to affect input costs and pricing dynamics across sectors. Higher education and health care systems face renewed uncertainty around federal grants, especially research funding, often playing out through appropriations and the courts. And tighter immigration enforcement and higher-cost or more restrictive visa pathways risk constraining labor supply in construction and other labor-intensive industries, potentially complicating delivery schedules for housing, infrastructure, and industrial development.

Five Finance Trends to Watch in 2026

Looking ahead, we are watching:

1. implementation timing and technical guidance under H.R. 1;
2. the trajectory of bank and capital-markets rulemaking and supervisory guidance;
3. tariff developments and supply-chain pass-through;
4. labor availability constraints that may affect construction budgets and completion timelines; and
5. the extent to which housing initiatives—including agency execution (loan limits, multifamily caps, and MBS-market interventions)—translate into improved affordability, higher origination volumes, and downstream demand across residential, multifamily, and related credit markets.

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