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President Trump demanded in a Truth Social post that Fannie Mae and Freddie Mac purchase $200 billion in mortgage bonds, claiming that this move would push down mortgage interest rates. So, this raises the question: Will it actually lower mortgage rates?
It already has. Here’s what it all means.
First, some background.
Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that back the funding of mortgages issued by private lenders. They are the financial foundation that supports conventional loans, the most common type of home loans.
After lenders issue the loans, Fannie and Freddie package thousands of mortgages into securities that are offered in the bond market. These mortgage-backed securities (MBS) pass the payments made by homeowners as income to investors.
President Trump has ordered Fannie and Freddie to buy back $200 billion of the mortgage-backed bonds in an effort to lower mortgage rates.
“GSE bond purchases generally increase demand for MBS,” Bhavesh Patel, consumer channel executive at Chase Home Lending, told Yahoo Finance. “As demand for MBS rises, the yield (or interest rate) that investors require falls. Mortgage rates are closely tied to the yields on MBS. When yields decrease, lenders can offer lower mortgage rates to borrowers.”
The mere announcement of Trump’s GSE bond purchase demand on Jan. 8 led to a 20-basis-point decline in mortgage rates over the next two business days. While they have since rebounded from those initial lows, mortgage rates had already edged lower over the last couple of months of 2025.
Victor Kuznetsov, managing director and co-founder of Imperial Fund Asset Management, said the year-end rate declines were because Fannie and Freddie had already been buying mortgage bonds.
“Mortgage rates have already tightened by about 35 basis points over the past two to three months, since the GSEs ramped up purchase activity to $15 billion per month in October and November 2025. This slightly increased affordability for borrowers as intended,” Kuznetsov said.
Kuznetsov believes that, should Fannie Mae and Freddie Mac indeed purchase more bonds as Trump wants, the timeline of the additional $200 billion in GSE mortgage purchases will determine their impact in 2026.
If Fannie and Freddie spread the purchases out over the course of 2026, the effect could be minimal, he said. However, the timing of the Trump-mandated purchases has not been announced.
“Bond rates do affect mortgage rates, but they are not the only factor. Inflation, geopolitical events, and the Federal Reserve’s monetary policy will continue to affect mortgage rates in 2026,” Kuznetsov added.
Chase’s Patel agrees.
“A large GSE bond purchase could put downward pressure on mortgage rates, making borrowing more affordable for homebuyers. However, the actual impact depends on broader market conditions, the scale of the purchases, and other economic factors,” Patel said.
Patel notes that mortgage rates are already near three-year lows.
“That means there’s opportunity for both homeowners and homebuyers to save at a time when affordability has been top of mind,” he said. “Many homeowners may have heard some version of the ‘1% rule’ — the idea that you might wait for rates to drop by 0.5% or 1% before considering refinancing. However, smaller rate reductions can really add up over the life of your loan.”
Patel provided an example:
For a $400,000, 30-year fixed-rate mortgage, each decline of just 0.125% could save you approximately $30 on your monthly payment, or about $360 per year. Of course, the amount of savings will vary based on your loan amount and the mortgage loan product you choose.
Patel said now might be a good time to lock in a mortgage rate, especially if the lender allows you to lock in your rate for 90 days with the option of a one-time rate float down if rates move even lower.
“If you’re thinking of refinancing or buying a home, the bottom line is that now is a great time to check in and see the rate that you may qualify for,” he added.
Laura Grace Tarpley edited this article.