President Trump directs Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, aiming to lower rates and improve home affordability.
WASHINGTON: President Donald Trump has ordered a $200 billion purchase of mortgage bonds to reduce housing costs.
He announced the directive in a post on Truth Social, stating it would drive mortgage rates and monthly payments down.
“Because I chose not to sell Fannie Mae and Freddie Mac in my First Term … it is now worth many times that amount,” Trump wrote.
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Federal Housing Finance Agency Director Bill Pulte confirmed Fannie Mae and Freddie Mac would execute the purchase.
Pulte told Reuters the two government-sponsored enterprises had “ample liquidity” to carry out the order.
He cited nearly $100 billion in available funds at each entity when accounting for assets beyond listed cash.
The combined cash and cash equivalents reported by the firms was less than $17 billion as of September 30.
Pulte declined to provide a timeline or further details on the mortgage-backed securities purchases.
“We’re not disclosing what we are going to be doing, but we’re very serious about executing on it,” he said.
He expects the purchases to lower mortgage rates and help resuscitate the housing market.
Housing affordability has become a key political issue ahead of the November election.
The move recalls the Federal Reserve’s bond-buying quantitative easing programs during the pandemic.
An analyst said the $200 billion purchase would have a “fairly small impact” on mortgage rates.
Redfin’s Chen Zhao estimated it might lower borrowing costs by 10 to 15 basis points.
Pulte said the Fed and Treasury Department would play no role in funding the purchases.
The initiative would be funded solely by liquidity on the balance sheets of Fannie and Freddie.
Trump has repeatedly pressured the Fed to cut interest rates more aggressively.
The President recently announced an intention to bar institutional investors from buying single-family homes.
Pulte said Trump would announce more housing initiatives at the World Economic Forum in Davos.
Fannie Mae and Freddie Mac have been under government conservatorship since the 2008 financial crisis.
The firms support the housing market by purchasing mortgages from lenders, freeing up credit.
The White House did not immediately respond to requests for further information. – Reuters
