The ultimate impact of such a move would likely be limited because this would be a relatively small asset purchase program, by historical standards.
President Trump said he is directing the federal government to buy $200 billion in mortgage bonds above what they would normally buy, which he said on social media would help bring down mortgage rates and combat the housing affordability crisis. The funds would come from Fannie Mae and Freddie Mac, mortgage companies that are under government conservatorship.
The news brought about an immediate rally in MBS markets, which translated to lower rates.
But the ultimate impact will be small. The 30-year fixed mortgage rate commonly used by the average homebuyer may dip from about 6.15% to about 6%.
We estimate the move will bring mortgage rates down 10 to 15 bps. That means rates may decline to 6% from 6.1% or 6.15%. We don’t expect this to massively lower rates or unlock tons of inventory.
The impact is likely to be limited because spending $200 billion on mortgage bonds is actually a relatively small asset purchase program. For instance, the Federal Reserve has instituted various Quantitative Easing (QE) programs over the last two decades to bring mortgage rates down. In those programs, the Fed bought much larger quantities of both MBS and Treasury securities to push down long-term rates (such as mortgage rates).
Here’s a summary:
- QE1 (2008 to 2010): $300 billion in Treasuries and $600 billion in MBS
- QE2 (2010 to 2011): $600 billion in Treasuries and no MBS
- QE3 (2012 to 2014): $790 billion in Treasuries and $823 billion in MBS
- QE4 (2020 to 2022): $2 trillion in Treasuries and $2.5 trillion in MBS
It’s unclear whether Fannie and Freddie have the ability to make such a move.
Fannie and Freddie have already been increasing their MBS purchases through late 2025. Whether they could make $200 billion in additional purchases depends on how much cash they have, and whether they have room in their portfolio before they hit the regulatory caps on how much MBS they can retain.
The President could not direct the Fed to make MBS purchases.
The Fed is independent from the executive branch. On numerous occasions, Fed Chair Powell has rejected the idea of buying MBS to bring mortgage rates down. He has pointed to the housing supply shortage as the root cause of the affordability crisis. The Fed also started to pivot away from MBS toward Treasuries in late 2025.
We will keep an eye on how mortgage rates move in the aftermath of this news.
