President Donald Trump said that having Fannie Mae and Freddie Mac purchase $200 billion in mortgage bonds would drive mortgage rates and monthly payments down as the administration works on affordability.
Trump wrote 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. It is one of my many steps in restoring Affordability, something that the Biden Administration absolutely destroyed. We are bringing back the AMERICAN DREAM that was destroyed by the last Administration. MAKE AMERICA GREAT AGAIN!
The 47th president wrote that his decision during his first term in office not to sell the companies allowed them to amass $200 billion.
He wrote, “Biden ignored the Housing Market, and instead was immersed with High Crime, Open Borders, runaway INFLATION, the Afghanistan Disaster, and a Military that he left in Chaos and Confusion. Everything was broken, but I, as President of the United States, have already fixed it!”
Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that the federal government bailed out during the 2008 financial crisis. Mortgage-backed securities rose compared to treasuries, and mortgage-tied companies such as Rocket Mortgage and LoanDepot increased.
Financial experts found that the Trump administration’s move serves as a straightforward strategy to lower mortgage rates.
“If the Trump administration allows Fannie and Freddie to grow their retained portfolios, there’s no question it will have downward pressure on mortgage rates – probably at least a quarter of a point, maybe more,” David Dworkin, president and CEO of the National Housing Conference, said.
Citigroup has said that if Fannie and Freddie were to increase their portfolio by $250 billion, then premiums on their mortgage bonds would fall by 0.25 percent, which would result in a similar drop in mortgage rates for homeowners.
Bill Pulte, the director of the Federal Housing Finance Agency (FHFA), said that the Trump administration’s move “can be executed very quickly. We have the capability, we have the cash to do it, and we are going to go about executing it very smartly and in a very big way.”
He added that the move would serve as a “one-two punch,” as the Trump administration announced that it would ban institutional investors from buying single-family homes. The president said he plans to discuss more details about his affordability platform at the World Economic Forum in Davos, Switzerland, later in January.
Read the full article here