Fannie Mae and Freddie Mac will buy $200 billion of mortgage bonds as part of the administration’s latest affordability push, Federal Housing Finance Agency Director Bill Pulte told Semafor.
President Donald Trump had said on Truth Social he wanted his “Representatives” to buy the bonds in an effort to “drive Mortgage Rates DOWN.”
“Mortgage bonds are critical to mortgage interest rates, so if you purchase bonds, oftentimes the price will go up and the rate will go down,” Pulte said in an interview, adding that this was one of “30 to 50 different ideas” officials have pitched to Trump: “It’s been all-hands-on-deck.”
The purchase, which would also boost Fannie and Freddie’s profits as the administration mulls a public offering, is likely to revive a 2008-era debate over how much risk the firms should take on and how much they should distort the market.
Though the pair have already bought more bonds in recent months, it’s “a very small amount compared to the announcement,” Pulte said.
The Federal Reserve, which influences interest rates through a similar but larger-scale (and thus more effective) process known as quantitative easing, has been offloading some of its own mortgage bonds. That could offset some of the purchase’s effects, Fed Gov. Stephen Miran said.