President Donald Trump has ordered government-sponsored housing giants Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities (MBS), a move designed to bring down mortgage rates and make homeownership more affordable for Americans currently priced out of the market.
In a post on his Truth Social platform, Trump said the directive aims to reduce borrowing costs directly:
“I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS. This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable.”
The plan was quickly confirmed by Federal Housing Finance Agency (FHFA) Director William Pulte, who stated that Fannie Mae and Freddie Mac will carry out the bond purchases.
Markets React Immediately
Financial markets responded swiftly to the announcement. According to Mortgage News Daily, the 30-year fixed mortgage rate fell to around 6%, its lowest level since early 2023. The move offered a rare dose of relief after years of elevated borrowing costs that have sidelined many potential buyers.
Why This Matters for Homebuyers
Mortgage rates play a critical role in determining whether households can afford to buy or refinance a home. Even small changes can significantly impact monthly payments, housing demand, and overall economic activity.
Here’s how the system works:
-
Lenders originate mortgages and often sell them to Fannie Mae or Freddie Mac.
-
These agencies bundle the loans into mortgage-backed securities and sell them to investors.
-
This recycling of capital helps lenders issue new loans and, in theory, keeps mortgage rates competitive.
By shifting toward direct purchases of mortgage bonds, the government is attempting to apply downward pressure on mortgage rates more forcefully than through traditional market channels.
Will $200 Billion Be Enough?
The key question is scale. The total U.S. mortgage-backed securities market is estimated at around $11 trillion, making a $200 billion purchase meaningful—but relatively small in comparison.
That said, Fannie Mae and Freddie Mac have already been moving in this direction. Since June, their combined MBS holdings have increased by more than 25%, reaching nearly $234 billion by October. Trump’s order accelerates and amplifies that trend.
While the move alone may not dramatically reshape the mortgage market, it could help stabilize or modestly lower rates, especially when combined with broader economic or monetary shifts.
The Bigger Picture
Mortgage rates have remained stubbornly above 6% for several years, even after easing slightly in recent months. That’s still more than double the ultra-low rates seen earlier in the decade.
Trump’s directive signals a more aggressive use of housing finance tools to address affordability concerns—one that could influence not only homebuyers, but also housing prices, consumer spending, and overall economic growth.
Whether the impact proves temporary or lasting will depend on how markets respond and whether further measures follow. For now, the message is clear: lowering mortgage rates has become a top policy priority.
Article By- Shahzad Ahmad
Frequently Asked Questions
What exactly did President Trump order Fannie Mae and Freddie Mac to do?
President Trump directed Fannie Mae and Freddie Mac to purchase $200 billion worth of mortgage-backed securities. The goal is to increase demand for these bonds, which helps lower mortgage interest rates and reduce monthly payments for homebuyers.
How does buying mortgage bonds lower mortgage rates?
When Fannie Mae and Freddie Mac buy mortgage-backed securities, it injects liquidity into the housing finance system. Lenders can issue more loans at lower rates because they can more easily sell mortgages, which puts downward pressure on borrowing costs.
Will this immediately make mortgages cheaper for homebuyers?
The impact can be quick but limited. Markets reacted right away, with 30-year mortgage rates falling near 6%. However, broader and lasting reductions depend on market conditions, inflation expectations, and future policy actions.
Is $200 billion enough to significantly change the mortgage market?
On its own, probably not. The U.S. mortgage-backed securities market is estimated at around $11 trillion, so $200 billion is meaningful but not large enough to completely reshape rates. It may help stabilize or modestly reduce them rather than cause a dramatic drop.
Why does this matter beyond housing?
Mortgage rates affect home prices, refinancing activity, consumer spending, and overall economic growth. Lower rates can boost housing demand, free up household cash flow, and support broader economic momentum.
