Billionaire investor Bill Ackman in an X post on Sunday suggested merging U.S. government-sponsored enterprises Fannie Mae and Freddie Mac, saying the move would help reduce mortgage rates and achieve huge synergies both in their operations and in the trading price.

President Donald Trump's administration has been eying an initial public offering of Fannie Mae and Freddie Mac later this year, a senior administration official told Reuters on Friday, confirming news first reported by the Wall Street Journal.

The share sales could value Fannie and Freddie at nearly $500 billion combined, the official said.

Ackman, who has held stakes in Fannie and Freddie for more than a decade, said the merger would also reduce the cost and risks of government oversight as there would be only one institution that would require oversight by the Federal Housing Finance Agency.

Fannie and Freddie were created by U.S. Congress to support the housing market by ensuring affordable mortgage financing, but crumbled after being severely bruised during the financial crisis.