Trump orders his ‘Representatives’ to buy $200 billion in mortgage bonds

By Ann Saphir

WASHINGTON, Jan 8 (Reuters) – U.S. President Donald Trump said on Thursday he is ordering his representatives to buy $200 billion in mortgage bonds to bring down housing costs.

“Because I chose not to sell Fannie Mae and Freddie Mac in my First Term … it is now worth many times that amount — AN ABSOLUTE FORTUNE — and has $200 BILLION DOLLARS IN CASH,” Trump wrote in a post on Truth Social.

“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,” Trump wrote.

Federal Housing Finance Agency Director Bill Pulte said on X that Fannie Mae and Freddie Mac will execute the purchase.

The combined cash and cash equivalents listed on the two firms’ balance sheets in their third quarter earnings reports to the Securities and Exchange Commission was less than $17 billion as of September 30.

Pulte in a phone call to Reuters said the two agencies had “ample liquidity” to carry out Trump’s order, including nearly $100 billion in available funds at each entity.

Arriving at that amount involves taking into account assets other than what is listed as “cash” on each company’s balance sheet.

Fannie’s balance sheet for the third quarter shows it holds $12.2 billion listed as “cash,” $27.2 billion listed as “restricted cash,” and $61.5 billion listed as “securities purchased under agreements to resell” for a total of $100.9 billion.

Freddie’s balance sheet for the third quarter shows it holds $4.6 billion listed as “cash and cash equivalents,” and $86.3 billion listed as “securities purchased under agreements to resell,” for a total of $90.9 billion.

AFFORDABILITY

Asked for further details on the MBS purchases, including on the timeline, Pulte demurred. 

“We’re not disclosing what we are going to be doing, but we’re very serious about executing on it,” he said, adding he expects the purchases to lower mortgage rates and help resuscitate the housing market.

Affordability of everything from groceries to homes has become a hot political issue even as Trump has occasionally dismissed affordability concerns and blamed inflation on his Democratic predecessor.

His public approval has mostly sagged since his inauguration as Americans worry about the economy.

Trump’s call to purchase $200 billion in mortgage bonds recalls what the Federal Reserve did when it bought those same types of bonds during the pandemic and its aftermath, as part of an effort called quantitative easing.

But compared with the Fed’s much larger bond purchases, $200 billion would have a “fairly small impact” on mortgage rates, said Redfin’s head of economics research, Chen Zhao, perhaps bringing borrowing costs down by 10 to 15 basis points.

“Mortgage rates have already declined from roughly 7% in early 2025 to the low 6s now, and we’ve actually seen very minimal pickup in demand in the housing market/increase in transaction volume,” he said.

In the Fed’s case it used money it created as the U.S. central bank to fund those purchases.

Pulte said the Fed and the Treasury Department would play no role in the current MBS purchases, which would be funded by liquidity on Fannie Mae and Freddie Mac’s balance sheets.

Trump has pressed the Fed to cut interest rates aggressively and the MBS purchases, if implemented, would likely provide some of the lift he has been seeking.

On Wednesday he announced his intention to bar institutional investors from buying single-family homes. Pulte said Trump would be announcing more initiatives on housing at Davos in a couple of weeks.

Fannie Mae and Freddie Mac have been government owned since 2008 during the financial crisis, when they required a massive government bailout.

The two firms provide support to the housing market by purchasing home loans that banks and private mortgage finance companies make to people buying a home or refinancing an existing loan. That frees up capacity on lenders’ balance sheets to make more loans, thus increasing the overall supply of home finance credit and holding down mortgage interest rates.

The White House did not immediately respond to requests for more information on Trump’s statement.

(Reporting by Kanishka Singh and Bhargav Acharya, Ann Saphir, Michael S. Derby, Trevor Hunnicutt; Editing by Ryan Patrick Jones, Lisa Shumaker and Chris Reese)