Mortgage rates fell sharply on Friday after President Donald Trump said he is directing mortgage giants Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, a rare federal push into the housing finance pipeline that is already reshaping rate expectations and reigniting debate over Washington’s role in a market that has priced out many buyers.
"Mortgage Rates are NOW 5.7%! Mortgage costs were HUGE under Biden (around 8%). That’s why almost no young families could afford a home. With my focus on Housing Affordability, and after I authorized Fannie Mae and Freddie Mac to invest their cash, and BUY $200 Billion Dollars in Mortgage Bonds, Mortgage Rates moved down to 5.7%. This is GREAT news for American Families, and real cost relief. We are bringing Housing Costs DOWN, and putting Americans FIRST!," the post read.
Fannie Mae and Freddie Mac, which have operated under government conservatorship since the 2008 financial crisis, do not originate home loans. Instead, they buy mortgages from lenders and either hold them or package them into mortgage-backed securities, or MBS, that can be sold to investors, according to the Federal Housing Finance Agency.
Mortgage News Daily’s national average index for a 30-year fixed mortgage showed 6.06% on Jan. 9, down from 6.21% the prior day, with the site’s table listing the prior-year rate at 7.15%.
Other market coverage, citing Mortgage News Daily, reported a larger one-day move that briefly put the 30-year rate at 5.99%, a psychologically important threshold for buyers and refinancers.
Government intervention through MBS purchases has precedent.
During the early months of the COVID-19 crisis, the Federal Reserve bought $580 billion in agency MBS in March and April 2020, according to a Federal Reserve Bank of Dallas analysis, and the Fed increased its agency MBS holdings from $1.4 trillion in March 2020 to $2.3 trillion by June 2021.
The Fed also cut its benchmark rate to a target range of 0 to 1/4 percent in March 2020.
The Trump-directed buying plan also sharpened questions about whether Fannie and Freddie will remain tools of policy rather than candidates for privatization.
"Trump praised his decision not to IPO the companies in his first term ... This does not sound like a President who is in a rush to IPO the enterprises," TD Cowen analyst Jaret Seiberg wrote in a note, Reuters reported.
JonesTrading analyst Mike O’Rourke added: "If the GSEs (Government-Sponsored Enterprises) can serve as a funding arm for Presidential policy, we shouldn't ever expect them to be re-privatized again."
Even with lower rates, affordability remains constrained by prices and inventory.
The National Association of Realtors said the median existing-home sales price was $409,200 in November 2025.
Refinancing demand had already been rising before Trump’s announcement.
The Mortgage Bankers Association said its holiday-adjusted Refinance Index was 133% higher than the same week one year earlier.
Meanwhile, U.S. household wealth reached a record $181.6 trillion in September 2025, up from $175.6 trillion in July, according to Federal Reserve data. The increase was driven by gains in the stock market from the AI boom and higher home prices.
Jim Thomas ✉
Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.
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