Trump Orders $200B Mortgage Bond Buy to Cut Housing Costs

President Donald Trump announced Thursday he is directing government representatives to purchase $200 billion in mortgage bonds, positioning the move as a strategy to reduce mortgage rates and improve housing affordability for Americans. Trump will direct Fannie Mae and Freddie Mac to execute the massive bond purchase using cash reserves accumulated by the government-sponsored enterprises.

Key Highlights

• Trump orders $200 billion mortgage bond purchase through Fannie Mae and Freddie Mac to lower rates.
• President claims initiative will reduce monthly payments and improve housing affordability for American homebuyers nationwide.

In a Truth Social post, Trump claimed that because he chose not to sell Fannie Mae and Freddie Mac during his first term, the mortgage giants are now worth "an absolute fortune" and have $200 billion in cash available. The president asserted this decision would "drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable."

Federal Housing Finance Agency Director Bill Pulte confirmed the directive, posting on social media that Fannie and Freddie "will be executing" Trump's instructions. However, it remained unclear from Trump's announcement exactly which entities would conduct the purchases or when the buying would commence.

Traditionally, the Federal Reserve has been the largest buyer of mortgage-backed securities, particularly during economic crises such as the pandemic when the central bank purchased hundreds of billions of dollars in securities, contributing to ultra-low mortgage rates. The planned purchases would significantly expand Fannie and Freddie's holdings, as they currently hold approximately $234 billion in mortgage-backed securities and can hold up to $200 billion more under their bailout agreement terms.

Financial markets responded positively to the announcement, with mortgage-related stocks surging—Rocket Companies shares jumped 6 percent while loanDepot soared 19 percent, and homebuilders including Lennar and Toll Brothers also posted gains.

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The announcement represents Trump's latest effort to address voter concerns about housing affordability ahead of midterm elections. Home prices have generally risen faster than incomes due to persistent construction shortfalls, making it increasingly difficult for renters to purchase their first homes and for existing homeowners to upgrade properties.

Donald Trump framed the initiative as correcting failures of the previous administration, claiming he is restoring affordability and bringing back the American Dream. The president described housing affordability as having deteriorated sharply as mortgage rates surged, placing homeownership further out of reach for many Americans.

However, questions remain about the effectiveness and potential risks of the strategy. Mortgage rates typically follow long-term Treasury rates rather than mortgage bond yields directly, raising uncertainty about whether the purchases would meaningfully impact borrowing costs. The move effectively revives state-directed demand for mortgage securities, a tool historically associated with crisis-era monetary policy.