President Trump aims to restore affordability by directing representative to buy $200 million in mortgage bonds to flood the market with cash decreasing interest rates.
“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.
Housing Expert, Cliff Freeman, says this should have a significant impact. “The net effect of this should be to lower the cost to consumers of interest rates somewhere between a 1/8th and ½ of a full point.” He said.
Freeman says this will increase sales and inventory and should shift the federal interest rate to below 6 percent he said.
So far, the markets have responded quickly. The 30-year mortgage rate dropped on Friday to near 6%, its lowest level since early 2023, according to Mortgage News Daily.
Trump is also proposing a ban preventing large institutional firms from buying single family homes. “Those starter homes are the ones they are buying and taking off the market.” He said.
According to Investopedia: the average 30-year fixed mortgage rate was 6.33% on Thursday, January 8. The 20-year fixed mortgage rate was 6.16%, the 15-year fixed mortgage rate was 5.47%, and the 10-year fixed mortgage rate was 5.24%. Average rates for other loan types include 6.36% for an FHA 30-year fixed mortgage and 6.42% for a jumbo 30-year fixed mortgage.
Freeman points to a “psychological impact” on buyers. He said people tend to prefer numbers just below a round number, so it entices them to buy. He says looking at “6” percent, isn’t as enticing as “5.99” percent. He says by lowering the interest rate and shifting the psyche along with flooding the market with more cash flow, we should improve the housing market for 2026.