President Trump just announced plans for Fannie Mae and Freddie Mac, two government-sponsored enterprises, to purchase $200 billion in mortgage bonds. The goal is simple: increase demand for these bonds to push mortgage rates and monthly payments down. Understandably, homebuyers and homeowners are paying attention.
Here’s how purchasing mortgage bonds might affect your rate:
- Mortgage rates fluctuate based on a number of external factors, including supply and demand.
- When Fannie and Freddie keep mortgage bonds instead of selling them, it means fewer bonds are available in the market, which typically pushes their prices up.
- Since mortgage rates move inversely to mortgage bond prices, this could pull rates down. (When mortgage-backed security prices go up, rates go down.)
This isn’t just a future plan; it’s already starting. The FHFA has confirmed an initial $3 billion purchase, a move that helped mortgage rates dip below 6% for the first time in nearly three years.
However, to put this in perspective, the mortgage market is $9 trillion, and daily trading volume runs $100 to $300 billion. So, while the $200 billion matters, it represents a relatively small portion of the overall market and may have only a modest impact on rates. Where rates go long-term depends on broader economic factors like inflation, unemployment, and the strength of the economy.
In addition to his mortgage bonds announcement, President Trump has also proposed restricting large institutional investors from purchasing single-family homes. While this sounds like a win for homebuyers, it’s important to note that institutional investors currently own only 1 to 3% of single-family residences nationwide. Still, the proposal signals a renewed focus on prioritizing owner-occupied buyers.
Ready to purchase a home? What you can do next
Right now, homebuyers are asking: Should I move forward or wait for rates to drop?
The truth is, waiting for the “perfect” rate could cost you more than acting strategically. While President Trump’s mortgage bond purchase plan can influence rates, the timing and extent of these changes remain uncertain. If mortgage rates fall, more buyers may enter the market and increase competition. Mortgage rates have also already dropped from their high point.
Your action plan:
- Get prequalified now. Connect with your loan officer to understand your buying power at today’s rates. This puts you in a position to act quickly when you find a home you love.
- Remember, rates aren’t forever. If you buy now and rates drop further, refinancing is always possible. But finding the right home in the right neighborhood? That opportunity might not wait.
- Focus on what you can control. Rather than trying to time the market, ask your loan officer about ways to make homebuying more affordable, with options including no/low down payment loans, down payment assistance, interest rate buydowns, and more.
Though headlines are hopeful, don’t let uncertainty delay your homeownership goals. Your loan officer can help you create a strategy that makes sense for your life today, with flexibility to fine-tune tomorrow.
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Own a home? What you can do next
Right now, homeowners are asking: Is it the right time to refinance?
The answer depends on your personal “strike rate,” the interest rate at which refinancing will provide financial benefits. This isn’t a one-size-fits-all number. It depends on your current rate, how long you plan to stay in your home, your loan balance, closing costs, and your financial goals.
Your action plan:
- Calculate your personal strike rate. Work with your loan officer to identify the specific interest rate and dollar amount you’re targeting to save to make refinancing worthwhile.
- Discuss all your options. If rates do drop, consider whether a rate-and-term or a cash-out refinance better serves your needs, such as lowering payments, consolidating debt, or funding home improvements.
- Get your documents ready. Being prepared with updated income verification, asset statements, and credit information means you can move quickly when your strike rate hits.
Headlines don’t need to dictate how you optimize your mortgage. Reach out to your loan officer, review your current loan terms, and create a personalized refinancing strategy. If President Trump’s plan materializes as intended, you’ll be informed and prepared to act. Even if rates don’t move, your loan officer can help you uncover other ways to save on your mortgage.
The market may change, but your plans don’t have to
Whether you’re hoping to buy, refinance, or just have questions, let’s talk. Our local loan officers are here to help you cut through the noise and keep your plans on track.
Sources deemed reliable but not guaranteed. For educational purposes only. Refinancing may reduce your monthly payments but could also increase total finance charges over the life of the loan; consider all costs before deciding.