Mortgage rates dropped to their lowest point in over three years this week. The decline came after President Trump stated that Fannie Mae and Freddie Mac would purchase $200 billion of mortgage bonds.
Data from Freddie Mac shows the average 30-year mortgage rate stood at 6.06% through Wednesday, down from 6.16% the previous week. This marks the lowest level since September 2022, when rates first crossed above 6% after a long stretch of ultralow levels.
The average 15-year mortgage rate also decreased, falling to 5.38% from 5.46%. Mortgage rates are affected by Treasury yields, the economic environment, and demand for mortgage-backed securities. President Trump's announcement, in which he said he was "instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS," primarily influenced the third factor.
The post, dated Jan. 8, quickly boosted demand for mortgage-backed securities. Bond prices rose and yields fell, which helped push mortgage rates lower.
Buyers and refinancers responded to the sudden drop. According to Mortgage Bankers Association data, mortgage applications for home purchases increased 16% through Friday compared to a week earlier. Refinancing applications jumped 40%.
"With mortgage rates much lower than a year ago and edging closer to 6 percent, MBA expects strong interest from homeowners seeking a refinance and would-be buyers stepping off the sidelines," MBA president and CEO Bob Broeksmit said in a statement.
Lower mortgage rates could help improve home sales this year, though affordability will stay a challenge for many buyers, Realtor.com senior economic research analyst Hannah Jones said in a statement.
"We expect mortgage rates to remain relatively steady in the low-6% range this year, which could support modestly improving home sales in 2026," Jones said. "Even so, affordability constraints and the remaining stock of low-rate mortgages suggest any recovery in home sales is likely to be gradual rather than rapid."