President Trump just announced plans to purchase $200 billion in mortgage bonds using cash from Fannie Mae and Freddie Mac, two government-sponsored enterprises that support the housing market by buying mortgages from lenders. The goal is to lower mortgage rates and monthly mortgage payments. Understandably, homebuyers and homeowners are paying attention.
Here’s how mortgage bond purchases might affect your rate:
- Mortgage rates fluctuate based on a number of external factors, including supply and demand.
- When the government buys mortgage bonds, it increases demand for these securities, which typically pushes their prices up.
- Since mortgage rates move inversely to bond prices, this increased demand could pull rates down.
In addition to his mortgage bonds announcement, 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.
Currently, both of Trump’s proposals are in discussion; no laws have changed yet.
What homebuyers 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 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 points seen last year.
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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What homeowners 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 rate that makes refinancing worthwhile based on your loan amount.
- 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 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.