Housing News

Mortgage Rates Fall Below 6% for First Time Since 2023 as Trump Pushes for Housing Affordability

Mortgage interest rates plunged to just under 6% after President Donald Trump announced a push to increase housing affordability. This is the lowest rates have been since early 2023.

On Thursday, Trump posted on Truth Social that he was directing Fannie Mae and Freddie Mac to buy $200 million in mortgage bonds.

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

Mortgage rates were impacted quickly by the announcement. They dropped to 5.99% for 30-year, fixed rate loans, according to Mortgage News Daily. This was the first time they were in the high 5% range since February 2023.

The mortgage rate tracking site reported Friday that rates for a 30-year, fixed-rate mortgage fell to 5.99%, down from 6.21% the day before, according to Mortgage News Daily.

It's not known how long this rate drop will last. But for those who bought a home in the last few years when rates were around 7%, refinancing to a lower rate may save them money every month on their housing bills.

Homebuyers may also be able to get more home for their money, be able to qualify for loans to afford the homes they want, or lower their monthly mortgage payments.

This would be a change for the housing market as Fannie Mae and Freddie Mac do not typically buy mortgage bonds. Rather, the government-sponsored enterprises (GSEs) are the ones creating the bonds. These are home loans bundled into mortgage-backed securities (or bonds) that are sold to investors.

Most lenders do not hold the mortgages they originate on their books, so they continue to make new loans. Instead, they sell their loans on the secondary market, including to Fannie and Freddie. This allows lenders to free up money to continue making new loans.

But, now Trump says he is directing Fannie and Freddie to buy bonds because they have “an absolute fortune” in cash on hand to help decrease rates.

Rates fell in the immediate aftermath of the announcement. It’s not known how or when the bond purchasing will take place. Observers also wonder how much of a long-term impact this move will have on rates.

“Details remain limited, but it’s difficult to see this proposal moving mortgage rates in a large or lasting way,” Realtor.com Senior Economist Joel Berner said in a statement.

“A one-time infusion of roughly $200 billion, or even a series of smaller purchases that add up to that figure, is unlikely to meaningfully alter long-term mortgage pricing,” Berner said.

However, previous periods of lower mortgage rates were due in part to the U.S. Federal Reserve buying even larger quantities of mortgage bonds, as it did during the pandemic, he said. That helped drive rates to the 2% range, lows that had never been seen before or since.

“When similar actions by the Federal Reserve have lowered rates in the past, it’s because markets viewed those purchases as large, sustained, and predictable,” Berner said. “In fact, the Fed continues to hold $2 trillion of mortgage-backed securities even after 3 years of reducing their holdings. Without that same level of scale and credibility, any impact on mortgage rates would likely be modest and short-lived.”