President Trump directs government to buy $200 billion in mortgage bonds in effort to make housing more affordable

President Donald Trump directs the federal government to buy $200 billion in mortgage bonds, a move he promises will lower interest rates and make the cost of owning a home more affordable.

Trump, 79, made the announcement in a post shared to him Truth Social Accountin which he accused the former president Joe Biden‘s government of ‘ignoring the housing market’.

“Everything was broken, but I, as President of the United States, already fixed it!” he wrote. “Now I pay special attention to the housing market.”

The president also said that Fannie Mae and Freddie Mac, the two mortgage companies under state conservatorship, currently have “$200 billion in cash” that will be used to finance the purchase of the bonds.

“This will lower mortgage rates, lower monthly payments and make the cost of owning a home more affordable,” he promised. “It’s one of my many steps in restoring affordability, something that the Biden administration has absolutely destroyed.”

Trump shared no further details on a possible timeline for these purchases — nor did he say whether they will be made all at once, or spread out over a specific period of time.

Despite his promise that this move will improve affordability and reduce rates, which currently stand at 6.16%, Realtor.com® senior economist Jake Krimmel warns that there may be flaws in Trump’s plan and expresses skepticism that “it would move mortgage rates in a large and lasting way.”

“Details are scarce, but… a one-time injection of $200 billion – or a series of smaller purchases adding up to that amount – is unlikely to change mortgage market pricing over the long term,” he says.

Krimmel notes that these types of steps have been taken in the past during times of particular economic hardship, when the Federal Reserve bought mortgage bonds to temporarily lower interest rates, allowing existing homeowners to refinance.

For example, the Fed has dramatically increased its purchases of mortgage-backed securities (MBS) during the COVID-19 pandemic as part of its “quantitative easing” program. Currently, the company owns approximately $2 trillion in MBS, up from $2.7 trillion in June 2022.

However, in some cases this has led to a lock-in effect, leaving homeowners with mortgage rates well below current levels feeling unable to move for fear of higher monthly payments.

“The reason these purchases will lower interest rates if the Fed takes similar action is because investors know demand for MBS will be stable and predictable,” Krimmel explains.

“This could lower interest rates by a small amount in the short term, but to really get mortgage markets moving you would need large, sustainable and credible asset purchases.”

Krimmel further notes that “getting inflation under control” is also an important step in lowering mortgage rates in the long term.

“As the government continues to meddle in the housing market and worm its way into monetary policy, investors are more likely to be spooked and inflation expectations rise – the opposite of what is desperately needed,” he added.

However, Bill Pultedirector of the Federal Housing Finance Agency, praised Trump’s announcement.

“We are working on it. Thanks to President Trump, Fannie and Freddie will be executed,” Pulte wrote on X.

The announcement comes about three weeks after Trump acknowledged a “conflict” between his promise to improve affordability and his desire for homeowners to maintain their record-high home equity.

During a speech in the Oval Office on December 18, Trump said he wants to prevent home values ​​from falling for existing homeowners, especially older Americans.

“I don’t want to bring those numbers down because I want them to continue to have great value for their homes. At the same time, I want to make it possible for young people and other people to buy housing. In a sense, they are in conflict,” he said.

“In other words, you suddenly create a lot of housing, and that drives home prices down. So I want to take care of the people who have homes that have a value to their home that they never thought possible, that have made them rich and happy, especially in their later years. You have to be careful with that. I want to preserve them. At the same time, I want to make it possible for people to go and buy houses,” he continued.

Trump has repeatedly vowed to drive down housing costs and expand homeownership to millions more families. But if home prices fall outright, he risks alienating homeowners, who tend to be older and more conservative than renters.