President Donald Trump on Thursday said he is “instructing my Representatives” to buy $200 billion in mortgage bonds, asserting that this move will push the rates and monthly payments lower.
In a post on Truth Social, Trump stated that he was giving such a directive because Fannie Mae and Freddie Mac, the two government-sponsored mortgage-issuing agencies, are awash in cash.
There was no clarity about who Trump refers to as his representatives. The White House and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, failed to respond promptly to CNBC inquiries about their clarity.
FHFA Director Bill Pulte posted on X later Thursday, “We are on it. Thanks to President Trump, Fannie and Freddie will be executing.”
Pulte told CNBC in an interview hours before Trump made the post that he believes Trump would decide within the next month or two on a potential initial public offering of Fannie and Freddie.
Trump reported that his recent directive would help restore “affordability,” the term that has become central to the political rhetoric of the Democrats as they blame the Republican president of inability to deal with the high prices.
Trump piled on the administration of his former Leader, Joe Biden, saying that Biden had “ignored the Housing Market” in a series of other policy failures.
Trump announced that “Everything was broken, but I, as President of the United States, have already fixed it! Now, I am giving special attention to the Housing Market.”
He wrote, “Because I chose not to sell Fannie Mae and Freddie Mac in my First Term, a truly great decision, and against the advice of the ‘experts,’ it is now worth many times that amount — AN ABSOLUTE FORTUNE — and has $200 BILLION DOLLARS IN CASH.”
He further adds, “Because of this, I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS.”
The post by Trump was not clear on whether it would be the Treasury Department or another entity that would be doing the buying, or whether it would be Fannie and Freddie.
The Federal Reserve has previously been buying mortgage bonds in an effort to reduce rates, as a component of monetary policy referred to as “quantitative easing.” However, the executive branch cannot command the independent central bank to start those transactions.
However, the Mortgage bonds have previously been bought by the Treasury at times of severe volatility, like the 2008 and 2009 housing crisis. There was also no clarity on whether this acquisition will affect mortgage rates.
The quantitative easing conducted by the Fed usually entails purchasing various securities, and more so in the Treasuries, so as to reduce long-term rates on Treasuries.
Mortgage rates are usually guided by the long-term Treasury rates and not by mortgage bond yields. The 10-year Treasury yield moved a notch lower following Trump’s comments.
