Trump says $200B bond buying from Freddie, Fannie will cut mortgage rates

President Trump says directing Freddie Mac and Fannie Mae to buy $200 billion in mortgage bonds will make homeownership more affordable.

On his social media platform, the president said that the two federal mortgage companies will use their cash reserves for the purchase and that the move would reduce mortgage rates. Previous administrations have used bond buying in this way to enable owners to refinance at lower rates.

Janus Henderson’s global head of client portfolio management and portfolio manager, Seth Myer, said that Trump’s recent actions signal a clear strategy to address core affordability issues impacting Americans.

“On housing, he’s targeting institutional buyers, who own less than 2% of US single-family homes and accounted for less than 1% of purchases in 2024, a small but highly symbolic segment tied to affordability concerns. Finally, with mortgage rates hovering around 6.16% for a 30-year fixed loan, his move toward purchasing mortgage-backed securities underscores an effort to influence one of the most “sticky” components of household budgets.”

He acknowledged that there is no certainty that the moves will succeed in their aims, while Redfin chief economist Darryl Fairweather was not optimistic. “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 told AP News.

Affordability squeeze

In a fresh snapshot of America’s housing cost squeeze, the latest fourth-quarter 2025 home affordability figures from ATTOM reinforce how hard it remains for average earners to buy a house, even as small gains emerge in many markets.

According to ATTOM’s US Home Affordability Report, median-priced single-family homes and condos were less affordable than their long-term historical norms in 586 out of 594 US counties analyzed in the fourth quarter. Roughly 99% of the counties with sufficient data failed to return to affordability levels seen in previous years, reflecting the ongoing imbalance between housing costs and income growth nationwide.

Home prices remain elevated near record territory, with the national median value around $365,000, continuing to strain household budgets despite some easing late in the year.

At the same time, the report shows a notable shift on a quarterly basis with around 86% of counties more affordable in the fourth quarter than in the third, helped in part by declining mortgage rates. The average interest rate on a 30-year fixed mortgage fell from 6.34% in early October to 6.15% by the end of the year, providing incremental relief to buyers.

“Many Americans were priced out of buying a home in 2025, and affordability remains worse than historic norms in most markets,” said Rob Barber, CEO of ATTOM. “Still, modest, quarter-over-quarter affordability improvements in many markets at the end of the year offered some encouragement.”

Over the last five years, the affordability challenge has intensified as home prices have increased far faster than wages. The median home price has jumped 54% during that period, while average earnings rose only 29%, widening the gap for prospective buyers.

READ: Trump promises ban of single-family homes by ‘large institutional investors’

ATTOM measures affordability by comparing the income required to purchase a median-priced home with typical local wages. The calculation assumes a 20% down payment, a 30-year mortgage, and housing costs capped at 28% of gross income, including mortgage payments, property taxes, and insurance. In roughly 74% of counties, owning a median-priced home still requires more than that 28% threshold, a common benchmark used by lenders.