Trump Announces $200 Billion Mortgage Bond Purchase Plan to Lower Housing Costs

President Donald Trump on Thursday announced a directive to purchase $200 billion in mortgage-backed securities as part of a broader push to lower housing costs. The plan, revealed through a social media post on Truth Social, aims to reduce mortgage rates and make home ownership more affordable. Trump cited the accumulation of $200 billion in cash by Fannie Mae and Freddie Mac, entities he did not sell during his first term according to Business Times.

The Federal Housing Finance Agency director, Bill Pulte, stated that Fannie Mae and Freddie Mac are prepared to execute the purchases quickly. He emphasized that the government-backed entities have the capability and cash reserves to carry out the plan. Pulte noted that the purchases could help drive down interest rates and support the housing market as Politico reported.

Mortgage-backed securities rallied following the announcement, with market participants speculating about the implications for mortgage rates and home affordability. The move comes amid ongoing concerns over housing affordability, particularly in the lead-up to the November midterm elections according to Investing.com.

Why Did This Happen?

Trump has frequently criticized the Biden administration for what he views as a failure to address the housing affordability crisis. In his post, he emphasized that his decision not to sell Fannie Mae and Freddie Mac during his first term enabled them to amass cash reserves. The president framed the purchase as part of a broader strategy to restore affordability to the housing market as Bloomberg reported.

Political analysts suggest that the move is part of a larger effort to address voter concerns about housing costs ahead of the 2026 midterms. Trump’s advisers have raised alarms that housing affordability could become a key issue for the GOP in the upcoming elections according to Business Insider.

How Did Markets React?

Mortgage-related stocks surged following the announcement, with Rocket Companies and LoanDepot seeing significant gains. Investors responded positively to the prospect of lower mortgage rates and increased home affordability. The rally in mortgage-backed securities also contributed to market optimism as Barrons reported.

The Treasury market also showed signs of movement, with the yield on 10-year notes edging lower. The market’s response indicated that investors were taking the president’s plan seriously and factoring it into their expectations for mortgage rates and housing costs according to Bloomberg.

What Are Analysts Watching?

Analysts have expressed mixed views on the potential impact of the plan. While some see the purchase of mortgage-backed securities as a tool to lower interest rates, others question whether it will address the underlying supply-side issues in the housing market. Christopher Maloney, a mortgage strategist at Bok Financial Services, argued that the plan may lead to higher home prices rather than improved affordability as CBS News reported.

Richard Green, director of the USC Lusk Center for Real Estate, noted that while the purchase could have a modest effect on mortgage rates, it is unlikely to resolve the fundamental problem of housing supply. He compared the scale of the plan to previous efforts by the Federal Reserve and suggested that the impact may be more symbolic than substantive as Barrons reported.

The Federal Housing Finance Agency and the White House are expected to provide further details on the implementation of the plan. Market participants will be closely watching how quickly the purchases are executed and their ultimate effect on mortgage rates and home affordability as Bloomberg reported.

The announcement comes at a time when housing affordability remains a pressing issue for many Americans. With over 75% of homes across the U.S. deemed unaffordable for most Americans, the effectiveness of Trump’s plan will be a key factor in the housing market’s trajectory according to Investopedia.