In a post on Truth Social Jan. 8, President Donald Trump announced he is directing his representatives to purchase $200 billion in mortgage bonds in an effort to reduce mortgage rates and monthly payments for American homebuyers.
The move marks the administration’s latest attempt—its second this week—to address housing affordability concerns that have dominated voter priorities.
Focusing on the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, Trump claimed his decision not to privatize the mortgage giants during his first term has allowed them to accumulate substantial cash reserves.
“Now, I am giving special attention to the Housing Market. Because I chose not to sell Fannie Mae and Freddie Mac in my First Term, a truly great decision, and against the advice of the ‘experts,’ it is now worth many times that amount—AN ABSOLUTE FORTUNE—and has $200 BILLION DOLLARS IN CASH,” Trump wrote. “Because of this, I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS. This will drive Mortgage Rates DOWN, monthly payments DOWN and make the cost of owning a home more affordable.”
While $200 billion might seem significant, Realtor.com Senior Economist Joel Berner warned real estate professionals that the impact on housing is likely to be minimal, especially in the long term.
“A one-time infusion of roughly $200 billion, or even a series of smaller purchases that add up to that figure, is unlikely to meaningfully alter long-term mortgage pricing,” Berner said in a statement. “When similar actions by the Federal Reserve have lowered rates in the past, it’s because markets viewed those purchases as large, sustained, and predictable.”
Although Trump did not specify who the representatives are, or when or how the purchases would happen, Bill Pulte, director of the Federal Housing Finance Agency, which oversees operations of Fannie Mae and Freddie Mac, said his agency would be taking on the initiative.
“Fannie and Freddie are the entities that will do the purchases,” Pulte clarified on X shortly after Trump’s Truth Social post.
Trump is leveraging authorities granted by the 2008 conservatorship of Fannie Mae and Freddie Mac that allows the companies to increase their holdings of the mortgage bonds by around $200 billion, according to the Wall Street Journal’s Chief Economics Correspondent Nick Timiraos.
“Before 2008, Fannie and Freddie could and often did buy investments when it saw attractive opportunities, which could tighten spreads,” Timiraos wrote on X. “What’s notable about this intervention is that it’s being done during a period of relatively solid economic activity and with no meaningful stresses in credit markets.”
Mohamed El-Erian, president of Queens’ College at the University of Cambridge and Chief Economic Adviser at financial services conglomerate Allianz, wrote on X that this should serve as a reminder of two things that markets haven’t yet fully internalized.
“First, political pressures on the Federal Reserve could well extend beyond lowering interest rates to include asset purchases designed to influence housing affordability directly,” he wrote. “Second, as suggested in my November 12th column in the Financial Times entitled, ‘Markets should pay heed to the affordability squeeze’…Political pressure in response to public anxiety will demand policy responses.”
Berner added that mortgage rates could dip temporarily—something that Trump would surely welcome from a political standpoint. But he added that “upward pressure” from increased demand due to sinking rates would likely end up offsetting at least some of the affordability relief.
“As with other housing policy ideas focused on demand, the larger issue is that the market’s core challenge remains on the supply side. If this move is perceived as a one-off rather than a sustained effort to lower borrowing costs, it is unlikely to change builder behavior or materially increase housing production. Without meaningful gains in construction, the long-term impact would be minimal, aside from a potential one-time boost to home prices,” Berner claimed.
On the positive, sellers in high-inventory regions such as the south and west could benefit in the short term, Berner said, based on the weaker demand and larger availability of homes. But again, there would be drawbacks, as “(p)olicies that blur the lines between fiscal action and monetary policy” have the potential push inflation expectations higher, and indirectly drive mortgage rates up again in the medium-term.
“Overall, while the goal of improving affordability is broadly shared, policies that fail to address the underlying supply shortage are unlikely to deliver meaningful or lasting relief,” Berner said.
This mortgage bond announcement comes just days after Trump unveiled another housing initiative targeting corporate homebuyers.
On Tuesday, Trump announced via Truth Social his intention to ban large institutional investors from purchasing single-family homes.
“People live in homes, not corporations,” Trump’s post read, adding that he would discuss the topic further at his upcoming speech at the World Economic Forum in Davos in two weeks.
He said he is “immediately taking steps” to implement the ban and will call on Congress to codify it into law.
Following Trump’s tweet on Tuesday, Housing and Urban Development Secretary Scott Turner voiced support for the initiative.
“President Trump is not afraid to take bold action to make housing more affordable for the American people,” he said.
Editor’s note: this story was updated at 8:11 a.m. eastern time with comments from Joel Berner.
