Trump directs Fannie, Freddie to buy $200B in mortgage bonds to lower rates

The directive targets a housing affordability crisis that has persisted across Trump’s second term, with the 30-year fixed mortgage rate averaging 6.16% as of January 8 and no weekly reading below 6% recorded since September 2022. Economists said the bond purchases could modestly reduce rates but would not resolve the structural shortage of homes on the market that has pushed homeownership out of reach for many Americans.

WASHINGTON — President Donald Trump said Thursday he is directing the federal government to purchase $200 billion in mortgage bonds, using cash reserves held by Fannie Mae and Freddie Mac, the two mortgage companies under federal conservatorship since the 2008 financial crisis.

Trump made the announcement on social media, saying the purchases would make homeownership more affordable ahead of November midterm elections. “This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable,” Trump posted.

The White House did not immediately respond to questions about the timeline for the purchases.

What the plan would do

Trump said Fannie Mae and Freddie Mac hold $200 billion in cash that would be directed toward the bond purchases. The Federal Reserve has used similar mortgage bond purchases during past periods of economic turmoil to push interest rates lower — a strategy that allowed millions of homeowners to refinance into rates of 3% or less during the pandemic years.

The 30-year fixed mortgage rate averaged 6.16% as of January 8, according to Freddie Mac data. No weekly reading has fallen below 6% since September 2022. The average is down from nearly 7% at the start of Trump’s second term but has done little to ease public concern over housing costs.

Economists see limited impact

Daryl Fairweather, chief economist at the real estate brokerage Redfin, said the plan would not solve the market’s underlying problems.

“At a high level I feel this is putting a Band-Aid on a deeper issue and it probably wouldn’t lower rates enough to really undo the mortgage rate lock-in effect,” Fairweather said.

She estimated the government purchases could shave 0.25 to 0.5 percentage points off the 30-year rate. But even that reduction, she cautioned, would not address the chronic shortage of homes on the market, which has been a primary driver of unaffordability for buyers.

“Lowering mortgage rates by maybe a quarter point or half a point maybe will encourage more demand on the margins, but I don’t think it’s going to solve the restrictions that exist in the housing market,” Fairweather said.

Rate lock-in and inventory

The low rates from the pandemic era created what economists call the rate lock-in effect: homeowners who refinanced into mortgages at 3% or less are reluctant to sell and take on a new mortgage at current rates, which has reduced the number of homes available for sale. The bond purchase plan, as described, would ease borrowing costs modestly but not enough to prompt many of those locked-in homeowners to list their properties, according to Fairweather.

Home prices have generally risen faster than incomes because of a persistent construction shortfall dating to the recovery from the 2008 financial crisis, making it harder for renters to buy their first home and for existing owners to upgrade.

Risk to Fannie and Freddie reserves

Spending the $200 billion in cash held by Fannie Mae and Freddie Mac would reduce the buffer those institutions maintain against a housing market downturn. Both companies were placed into conservatorship in 2008 when the financial crisis destabilized the mortgage system. The cash reserves are designed, in part, to protect against a recurrence of that kind of stress.

Separately, the Federal Reserve holds roughly $2 trillion in mortgage-backed securities on its balance sheet, down from $2.7 trillion in June 2022, as the central bank has unwound holdings accumulated during the pandemic. There was roughly $21.1 trillion in outstanding mortgage debt as of mid-2025, according to the St. Louis Federal Reserve.

Broader housing agenda

The mortgage bond purchase announcement is one in a series of housing-related proposals from Trump. On Wednesday, he said he wants to block large institutional investors from buying houses, citing affordability concerns.

Trump and the White House have sought to show responsiveness to voter concerns about housing costs, food prices, and energy ahead of the midterm elections.