Trump orders $200 billion mortgage bond buy to cut home loan rates

The U.S. President Donald Trump said on Thursday that he has ordered “my representatives” to buy $200 billion in mortgage bonds to try to lower interest rates and monthly home payments, according to a post he wrote on Truth Social. Trump wrote that Fannie Mae and Freddie Mac, which are government-owned mortgage companies, are now worth “an absolute fortune” and have enough cash to fund this plan.

In his post, Trump said he did not sell Fannie Mae and Freddie Mac during his first term, and because of that, their value has grown many times over. Trump wrote, “Because I chose not to sell Fannie Mae and Freddie Mac in my First Term… it is now worth many times that amount — AN ABSOLUTE FORTUNE — and has $200 BILLION DOLLARS IN CASH.” He added, “Because of this, I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS”, as per the report by CNN.

Lower mortgage rates plan

Trump said the goal of this move is to reduce housing costs for Americans. He wrote, “This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable.” Traditionally, the Federal Reserve has been the biggest buyer of mortgage-backed securities, also known as mortgage bonds. During the COVID-19 pandemic, the Federal Reserve bought hundreds of billions of dollars worth of these securities.


Those large purchases helped push mortgage rates to very low levels, allowing many Americans to lock in cheap home loans during that time. In general, when the Fed or another major buyer purchases more mortgage bonds, mortgage interest rates usually go down. However, mortgage rates do not always fall because the Federal Reserve does not directly control the rates on home loans.

The Fed cut its main interest rate several times last year and again in 2024, which normally would lower mortgage rates. Even after those rate cuts, mortgage rates have stayed high, as stated by CNN. One reason is that many Americans who got very low mortgage rates during the pandemic are not selling their homes and moving. Because fewer people are selling, there are fewer homes available to buy.

Fannie Mae Freddie Mac future

Except for a short period in spring 2020, home inventory and home sales have stayed near their lowest levels since the housing and financial crisis that ended in 2010. The United States is short by about 4 million homes, which is needed to fix the housing supply problem and make homes affordable again. Trump has been thinking about an IPO, or public stock sale, of Fannie Mae and Freddie Mac for many years, including during his first term as president.

CNN reported in August that Trump and his economic advisors are planning a sale of stock in Fannie Mae and Freddie Mac. Trump did not say who exactly his “representatives” are. He also did not explain when, how, or through what process the $200 billion in mortgage bonds would be bought.

It is unclear whether Trump can approve such purchases without support from Congress. Bill Pulte, the director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, responded publicly to Trump’s post. Pulte said his agency would handle the initiative. Shortly after Trump’s Truth Social post, Pulte wrote on X, “We are on it, Mr. President!”, as per the report by CNN.

FAQs

Q1. What did Trump order regarding mortgage bonds?

Trump ordered his representatives to buy $200 billion in mortgage bonds to try to lower home loan rates.

Q2. Will buying mortgage bonds make houses cheaper?

Trump says it will help lower mortgage rates and monthly payments, but it is not guaranteed.