Trump’s Push for Mortgage Bond Purchases
President Donald Trump announced that directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds could help lower mortgage rates and monthly payments, as part of his efforts to combat affordability issues.
In a message on social media, he stated:
“I’m directing Congress to purchase $200 billion in mortgage bonds. This will lower mortgage rates, decrease monthly payments, and make home ownership more achievable. This is part of my broader plan to restore affordability, which the Biden administration has significantly harmed. We’re working to bring back the American dream that was lost during the previous administration. Let’s make America great again!”
He also mentioned that by not selling businesses during his first term, he helped companies save around $200 billion.
Trump criticized Biden for ignoring the housing market while facing issues with crime, immigration, inflation, and military chaos. He claimed, “Everything was broken, but as your President, I’ve already fixed it!”
Fannie Mae and Freddie Mac are government-supported entities that were rescued during the 2008 financial crisis. The demand for mortgage-backed securities surged along with companies like Rocket Mortgage and LoanDepot.
Financial experts, noting the intent behind Trump’s actions, suggested this move is aimed directly at reducing mortgage rates.
David Dworkin, president and CEO of the National Housing Council, commented, “There’s no doubt that if the Trump administration expands holdings for Fannie and Freddie, we could see mortgage rates drop by at least a quarter of a percentage point, maybe even more.”
Citigroup indicated that if Fannie and Freddie increased their portfolios to $250 billion, it could lead to a 0.25% reduction in mortgage bond premiums and lower rates for homeowners.
Bill Pulte, the Federal Housing Finance Agency (FHFA) Administrator, said that these initiatives could be executed promptly. He emphasized, “We have the capacity and resources to do this effectively and on a large scale.”
Pulte also referred to the plan as a “one-two punch,” especially after the administration announced a ban on institutional investors from purchasing single-family homes. Trump indicated he would provide more details about affordable housing strategies at the upcoming World Economic Forum in Davos, Switzerland, later in January.
