Trump says he wants government to buy $200B in mortgage bonds in a push to bring down mortgage rates

WASHINGTON (AP) — President Donald Trump said on social media Thursday that he is directing the federal government to buy $200 billion in mortgage bonds, a move he said would help reduce mortgage rates at a time when Americans are worried about home prices.

Trump and the White House have been trying to show they are responding to voter concerns about affordability ahead of midterm elections in November. Home prices have generally risen faster than incomes because of a construction shortage, making it harder for renters to buy their first home and for existing owners to upgrade to a new property — a challenge that dates back to Trump’s first term.

Trump said the two mortgage companies under government conservatorship, Fannie Mae and Freddie Mac, have $200 billion in cash that will be used to make the purchase.

“This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable,” Trump posted on social media.

White House officials did not immediately respond to questions about the timelines for how purchases would be funded. The Federal Reserve has in the past bought mortgage bonds during times of economic turmoil in order to help reduce interest rates.

There is roughly $2 trillion worth of mortgage-backed securities on the Fed’s balance sheet. That’s down from $2.7 trillion in June of 2022, when the annual inflation rate hit a four-decade high and mortgage rates climbed to levels that increased monthly payments for homebuyers.

The average 30-year fixed rate mortgage was about 6.2% on Thursday, down from nearly 7% when Trump took office, according to Freddie Mac, a mortgage company that has been under government conservatorship since the 2008 global financial crisis.

When the interest rate falls, it can become cheaper to service the debt on a monthly basis and affordability can improve for a period until home prices adjust in response to changes in the rates. There was roughly $21.1 trillion in outstanding mortgage debt as of the middle of last year, according to the St. Louis Federal Reserve.

Many homeowners took advantage of low interest rates during the pandemic to refinance their mortgages at rates of 3% or lower.

Trump last month said he planned to unveil housing reforms — and on Wednesday he said he wants to block institutional investors from buying houses.