Trump Unveils New Strategy to Slash Mortgage Rates. What It Could Mean for Homebuyers.

President Trump has ordered Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, a move aimed at lowering rates that have kept many would-be homeowners stuck on the sidelines.

“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,” Trump wrote on his Truth Social network.

Federal Housing Finance Agency Director William Pulte confirmed on social media that Fannie Mae and Freddie Mac will conduct the mortgage bond purchases.

Markets responded quickly. The 30-year mortgage rate dropped on Friday to near 6%, its lowest level since early 2023, according to Mortgage News Daily.

When you get a mortgage, your lender often sells it to Fannie Mae or Freddie Mac. They then bundle the loans into investments called mortgage-backed securities and sell them to investors. That cycle keeps cash flowing to lenders and, in theory, keeps mortgage rates in check. Shifting to having Fannie and Freddie buy these bonds instead is meant to lower mortgage rates.

Will $200 Billion Move the Needle?

The problem is that the mortgage-backed securities market totals around $11 trillion, according to LPL Financial. A $200 billion buy is significant, but unlikely to drive a major change in the mortgage market on its own.

Fannie and Freddie have already been heading this direction. The firms increased their MBS holdings by more than 25% since June, reaching almost $234 billion by October.

The purchases by Fannie and Freddie, as well as the increased buying Trump ordered, are meant to bring down mortgage rates, which have been stuck at above 6% for several years. Even as rates declined somewhat in recent months, they’re still more than double the rates earlier this decade.

“Fannie and Freddie have already loaded up their balances sheets with MBS,” wrote Mike Simonsen, chief economist at Compass, on the X social media platform. “Trump wants more of this. Seems like it’ll help rates, gotta wonder how sustainable it is.”

Others are more skeptical. Joel Berner, senior economist at Realtor.com, called any impact “modest and short-lived,” noting that the Federal Reserve’s own MBS purchases totaled $2 trillion, 10 times the scale of Trump’s directive. Even if rates fall, Berner warned, the relief may be fleeting: more buyers in the market could push home prices higher, erasing any gains from Trump’s directive.

There’s another wrinkle. The administration has also floated a separate proposal to end the government’s control of Fannie and Freddie. While both are publicly traded on the over-the-counter market, the U.S. Treasury has held a majority stake in them since the 2008 financial crisis. Some analysts have warned that privatizing them could push mortgage rates higher, undercutting the goal of this week’s directive. That’s because the government’s implicit backing keeps borrowing costs lower.

Trump’s directive is his second significant move on housing this week. On Wednesday, he announced a plan to ban large investors from buying single-family homes, another attempt to make housing more affordable in a market where tight inventory and high prices have kept many would-be buyers on the sidelines.