Trump urges Fannie Mae and Freddie Mac to increase bond purchases. Could this lead to reduced mortgage rates?

Trump Pushes for Major Mortgage Bond Purchases: Will It Lower Rates?

Former President Trump recently called on Fannie Mae and Freddie Mac to acquire $200 billion in mortgage-backed securities, asserting that such a move would help drive down mortgage interest rates. But does this strategy truly result in lower rates for borrowers?

In fact, mortgage rates have already responded. Here’s a breakdown of what’s happening and what it could mean for homebuyers.

Understanding Fannie Mae, Freddie Mac, and Mortgage-Backed Securities

Let’s start with the basics. Fannie Mae and Freddie Mac are government-sponsored entities that play a crucial role in the housing market by supporting the funding of mortgages issued by private lenders. They provide the backbone for conventional home loans, which are the most widely used type of mortgage.

Once a lender issues a mortgage, Fannie Mae and Freddie Mac bundle thousands of these loans into mortgage-backed securities (MBS), which are then sold to investors as bonds. The payments homeowners make on their mortgages are passed along to these investors as returns.

Trump’s directive is for Fannie Mae and Freddie Mac to repurchase $200 billion worth of these mortgage-backed bonds, aiming to bring interest rates down.

According to Bhavesh Patel, a consumer channel executive at Chase Home Lending, “When GSEs buy more mortgage-backed securities, demand for these bonds rises. This increased demand typically lowers the yield investors expect, which in turn allows lenders to offer lower mortgage rates to borrowers.”

How GSE Bond Purchases Influence Mortgage Rates

After Trump’s announcement on January 8, mortgage rates dropped by 20 basis points over the following two business days. Although rates have since rebounded somewhat, they had already been trending downward in the final months of 2025.

Victor Kuznetsov, managing director and co-founder of Imperial Fund Asset Management, attributes the late-year rate declines to ongoing bond purchases by Fannie Mae and Freddie Mac.

“Since October and November 2025, when the GSEs increased their monthly bond purchases to $15 billion, mortgage rates have tightened by about 35 basis points. This has slightly improved affordability for borrowers, as intended,” Kuznetsov explained.

Kuznetsov also noted that the impact of Trump’s proposed $200 billion in additional bond purchases will depend on how quickly Fannie Mae and Freddie Mac implement them in 2026. If the purchases are spread out over the year, the effect may be less pronounced. The exact schedule for these purchases has not yet been revealed.

He added, “While bond yields do influence mortgage rates, they’re not the only factor. Inflation, global events, and Federal Reserve policy will all continue to play a role in shaping mortgage rates in 2026.”

Patel from Chase Home Lending echoed this sentiment, stating, “A significant GSE bond purchase could help push mortgage rates lower, making home loans more affordable. However, the overall effect will depend on market conditions, the size of the purchases, and other economic influences.”

What’s Next?

See What Mortgage Rate You Might Qualify For

Patel points out that mortgage rates are currently at their lowest levels in three years.

“This presents an opportunity for both current homeowners and prospective buyers to save, especially as affordability remains a key concern,” he said. “Many people are familiar with the ‘1% rule’—waiting for rates to fall by half a percent or a full percent before refinancing. But even smaller drops in rates can lead to significant savings over the life of your loan.”

For example, on a $400,000, 30-year fixed-rate mortgage, a decrease of just 0.125% could lower your monthly payment by about $30, or $360 annually. The exact savings will depend on your loan size and the specific mortgage product you choose.

Patel also suggests that now could be a good time to lock in a mortgage rate, especially if your lender offers a 90-day rate lock with the option for a one-time rate float down should rates fall further.

“If you’re considering refinancing or purchasing a home, it’s a smart move to check what rates you might qualify for right now,” he added.

Laura Grace Tarpley contributed to this article.