JACKSONVILLE, Fla. – President Donald Trump is pushing new proposals aimed at making housing more affordable, including banning large institutional investors from buying single-family homes and directing the federal government to purchase $200 billion in mortgage-backed securities — a move that is already impacting interest rates.
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Mortgage rates dipped below 6% for the first time in three years following Trump’s announcement, signaling how quickly financial markets can react to potential federal intervention.
Trump has asked the Federal Housing Finance Agency to consider purchasing mortgage bonds through Fannie Mae and Freddie Mac, a strategy last used during the COVID-19 pandemic to stabilize the housing market.
“The last time the government stepped in and started buying mortgage-backed securities was really around COVID time,” said Jason Kindler, owner of First Coast Mortgage Funding. “They were buying about $40 billion a month.”
During that period, mortgage rates dropped below 3%. Kindler cautioned rates are not expected to return to those historic lows, but said government-backed bond purchases at this scale would almost certainly push rates down.
“It’s not just that rates may go down, this does cause rates to go down,” Kindler said. “If the government decides they’re going to act and start buying mortgage-backed securities at $20 billion a month or $200 billion total, rates will go down.”
Lower rates could provide much-needed relief for first-time homebuyers who have struggled with high monthly payments as home prices and borrowing costs surged over the past several years.
For example, Kindler said a buyer purchasing a $300,000 home at a 7% interest rate could save roughly $350 per month if rates drop to 5.5%.
“Even that one percent difference is a big deal,” he said.
However, lower rates may come with a trade-off. While affordability improves, reduced borrowing costs can also drive demand and eventually push home prices higher.
“When rates get down and there becomes more demand, then prices will go up,” Kindler said. “If you’re thinking about getting into a home, this could be a warning sign that demand is going to increase.”
Homeowners who bought homes in the past few years could also benefit if rates continue to fall, particularly through refinancing options that may lower monthly payments.
Federal Housing Finance Agency Director William Pulte confirmed on social media that Fannie Mae and Freddie Mac will conduct the mortgage bond purchases. It remains unclear when those purchases will begin or how quickly they could influence long-term affordability.