U.S. mortgage rates have declined significantly following an order from President Donald Trump to purchase $200 billion in mortgage bonds. The move is intended to lower borrowing costs and address housing affordability concerns.
"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 in a Truth Social post on Jan. 8. He described it as one of "many steps" planned to improve affordability nationwide.
On the same day, Federal Housing Finance Agency director Bill Pulte stated on X that "Fannie [Mae] and Freddie [Mac] are the entities that will do the purchases."
Action followed quickly. Pulte told reporters at the White House on Friday, "We put in a $3 billion buy already."
Market data showed a reaction. According to Mortgage News Daily, the average interest rate for a 30-year fixed mortgage fell to 5.99% on the morning of Jan. 9. This was down from 6.21% the previous day, a drop of 22 basis points. It represents the lowest level for the 30-year average rate since February 2023.
Pulte explained the mechanism, saying, "What will happen is, as mortgage bond prices go up, interest rates theoretically go down. It's a very, very big opportunity for the housing market and for all Americans aspiring to get that American dream."
The $200 billion order follows another announcement from Trump the day before, in which he said he would ban large institutional investors from buying single-family homes. He argued the American Dream of homeownership is "increasingly out of reach for far too many people."
However, some analysts questioned the potential effect. JPMorgan Chase homebuilding analysts wrote in a note responding to the bond-buying plan, "Similar to our view on President Trump's post regarding a ban on institutional investors buying homes, we do not believe this initiative will have any significant impact on the housing market."
They noted that "$200 billion of mortgages accounts for only roughly 1.4% of the approximately $14.5 trillion mortgage market."
Data on affordability challenges persists. Realtor.com estimates that a typical U.S. household would need to earn about $118,530 annually to afford a median-priced home of $402,500. This is more than 50% above today's median household income of roughly $77,700.