President Trump demanded in a Truth Social post that Fannie Mae and Freddie Mac purchase $200 billion in mortgage bonds, claiming this move would push down mortgage interest rates.
The announcement of Trump's demand on January 8 led to a 20-basis-point decline in mortgage rates over the next two business days.
"GSE bond purchases generally increase demand for MBS," Bhavesh Patel, consumer channel executive at Chase Home Lending, told Yahoo Finance. "As demand for MBS rises, the yield that investors require falls. Mortgage rates are closely tied to the yields on MBS. When yields decrease, lenders can offer lower mortgage rates to borrowers."
Victor Kuznetsov, managing director and co-founder of Imperial Fund Asset Management, said mortgage rates had already tightened by about 35 basis points over the past two to three months. He attributed this to the GSEs ramping up purchase activity to $15 billion per month in October and November 2025.
"This slightly increased affordability for borrowers as intended," Kuznetsov said.
Kuznetsov believes the timeline of the additional $200 billion in GSE mortgage purchases will determine their impact in 2026. If Fannie and Freddie spread the purchases out over the course of 2026, the effect could be minimal, he said. The timing of the Trump-mandated purchases has not been announced.
"Bond rates do affect mortgage rates, but they are not the only factor," Kuznetsov added. "Inflation, geopolitical events, and the Federal Reserve's monetary policy will continue to affect mortgage rates in 2026."
Patel agrees. "A large GSE bond purchase could put downward pressure on mortgage rates, making borrowing more affordable for homebuyers. However, the actual impact depends on broader market conditions, the scale of the purchases, and other economic factors," Patel said.
Patel notes that mortgage rates are already near three-year lows. "That means there’s opportunity for both homeowners and homebuyers to save at a time when affordability has been top of mind," he said.
He provided an example: For a $400,000, 30-year fixed-rate mortgage, each decline of just 0.125% could save approximately $30 on the monthly payment, or about $360 per year.
Patel said now might be a good time to lock in a mortgage rate, especially if the lender allows a rate lock for 90 days with a one-time rate float down option. "If you’re thinking of refinancing or buying a home, the bottom line is that now is a great time to check in and see the rate that you may qualify for," he added.