In a recent announcement, President Donald Trump stated that he had instructed his representatives to acquire $200 billion worth of mortgage bonds, aiming to reduce mortgage interest rates and lower monthly payments for homeowners. The directive was communicated via a post on the social media platform Truth Social.
Trump highlighted the financial strength of Fannie Mae and Freddie Mac, two government-controlled mortgage entities, describing them as "an absolute fortune" possessing sufficient cash reserves to facilitate the planned purchases. He attributed this financial position to his decision not to sell these entities during his first presidential term, asserting that this choice led to the accumulation of substantial cash—specifically $200 billion—which he is now directing towards mortgage bond acquisitions.
"Because I chose not to sell Fannie Mae and Freddie Mac in my First Term667; it is now worth many times that amount 667; AN ABSOLUTE FORTUNE 667; and has $200 BILLION DOLLARS IN CASH. Because of this, I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS," his post indicated.
The president emphasized that this strategy is designed to lower mortgage rates and monthly payments, thereby making the cost of owning a home more affordable for Americans.
Historically, the Federal Reserve has acted as the primary purchaser of mortgage-backed securities (MBS), including mortgage bonds. During the COVID-19 pandemic, the Federal Reserve acquired hundreds of billions of dollars worth of MBS, a policy move that contributed to historically low mortgage interest rates, enabling many borrowers to secure favorable terms.
The dynamic behind these purchases generally involves increasing demand for these securities, which tends to lower the yields and, consequently, the interest rates on mortgages associated with them. However, the Federal Reserve does not directly control mortgage rates, and purchasing MBS does not guarantee lower borrowing costs in every circumstance.
For example, despite the Federal Reserve lowering its benchmark interest rates multiple times in the previous years, mortgage interest rates have remained comparatively high. One factor contributing to sustained elevated rates is the reduced mobility among homeowners who secured low-rate mortgages during the pandemic period.
On the housing market front, home inventory and sales volumes have hovered near historically low levels similar to those seen following the 2010 housing crisis, with the exception of a brief period in the spring of 2020. Economic analysis from Goldman Sachs Research indicates that the United States faces a shortfall of roughly 4 million homes necessary to relieve supply shortages and restore housing affordability.
Regarding potential structural changes to these government mortgage entities, President Trump has previously considered an initial public offering (IPO) for Fannie Mae and Freddie Mac, including during his first term in office. Recent reports suggest ongoing plans by Trump and his economic advisers to pursue stock offerings of these organizations; however, details remain limited.
The president did not specify the identities of the "representatives" tasked with executing the $200 billion mortgage bond purchases, nor did he outline a timeline or procedural mechanics for how these transactions would occur. Furthermore, it is unclear whether the president possesses the unilateral authority to mandate such purchases without approval from Congress.
In response to the directive, Bill Pulte, director of the Federal Housing Finance Agency—the body overseeing Fannie Mae and Freddie Mac—indicated agency engagement with the initiative, posting on X, "We are on it, Mr. President!" following the president's announcement.
Additional context and updates on this development are forthcoming as more information becomes available.