Trump orders Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities to push mortgage rates lower

President Trump has told Fannie Mae and Freddie Mac to buy $200 billion worth of mortgage-backed securities, putting the White House directly into housing finance and pushing mortgage rates lower.

That decision jolted the market, cut risk premiums on new mortgage bonds, and sent homebuilder stocks higher.

This isn’t coming from the Federal Reserve. It’s coming straight from the president. And it’s not a suggestion.

If the agencies go through with the full buy, it would be the first time in U.S. history that a sitting president has ordered this kind of direct asset purchase through government-backed housing giants.

Trump takes control of mortgage policy and sidelines the Fed

The Fed usually calls the shots when it comes to interest rates. They buy Treasuries and mortgage bonds, but only when they think the economy needs help. That’s not what this is. Trump is doing this to bring down mortgage costs… fast.

The $200 billion number isn’t as big as what the Fed has done in the past, but it’s still enough to drop rates by about 0.25%, according to analysts.

And the effects showed up quick. Since the announcement, mortgage bond spreads dropped by 0.18 percentage points, Bloomberg reported. That kind of change doesn’t happen on its own. It came straight after the order.

Bill Pulte, who leads the Federal Housing Finance Agency, didn’t hold back. “This is the benefit of running things like businesses, you have options with your cash,” he said. “We’re focused on utilizing Fannie and Freddie in a way that no other president has.”

Not everyone liked what they saw. Kirill Krylov from Baird & Co. called it a red flag. “Buying assets explicitly to manipulate mortgage rates reintroduces political risk into a market that has spent more than a decade trying to distance itself from such practices,” he wrote.

This all comes after months of pressure from Trump, who’s been telling the Fed to cut rates. Now he’s doing it his own way, without waiting. He made it clear that if the Fed won’t act fast enough, he will.

Jeffrey Gordon from Columbia Law School didn’t dance around it either. “For the executive branch to undertake what amounts to a form of monetary policy sets a new precedent and chips away at Fed independence,” he said. He pointed out that housing affordability isn’t in the Fed’s mandate, but the mortgage market is still tied to how rates are set across the board.

White House leans on GSEs while IPO questions build

Before the 2008 crash, presidents didn’t have this kind of control. But after the bailout, Fannie Mae and Freddie Mac were put under government watch. Most administrations stayed hands-off. But Trump isn’t following that playbook. His team sees them as a tool for changing the mortgage market, and they’re using it.

Rob Zimmer, who represents the Community Home Lenders of America, said the spread between 10-year bonds and mortgage rates has been too high for too long. “Young buyers have been penalized,” he said. “It absolutely will help first-time home buyers, among others.”

And now people are asking: what happens to the IPO? Trump had talked about taking Fannie and Freddie public. But this new plan makes that uncertain. The agencies had already started buying more bonds behind the scenes. That looked like prep work for an IPO. Now, no one’s sure that’s where it’s going anymore.

Vitaliy Liberman from DoubleLine Capital says the idea of a full handoff to the public is probably dead. “Everyone’s perception of the IPO is the government is going to fully turn them over to the public,” he said. “But this suggests that will not happen because they’ve understood it’s an important tool and if they release it into the wild then they’ve lost control.”

Investors worry about profits while White House keeps pressure on

The president isn’t talking about investor profits. He’s focused on keeping mortgage rates down. That’s where the tension is. JPMorgan analysts said it straight. There’s a clash between the push to lower borrowing costs today and the long-term money Fannie and Freddie are supposed to bring in.

This isn’t some side project. It’s becoming central to Trump’s housing and economic strategy. And it’s coming while the country faces one of its worst affordability crises in decades. Instead of waiting for interest rates to fall, the White House is forcing the issue by using the GSEs to pump more money into the mortgage system.

This might not be the last time either. There’s no rule stopping Trump from ordering more purchases. The door is open for more. The GSEs are already under federal control, and with this order, that grip is only getting tighter.

The markets are watching closely. Investors are now caught between buying into companies that are tools of policy, or walking away from uncertain profits. But Trump has made it clear: he’s not done using these levers. And nobody knows where it stops.

If you're reading this, you’re already ahead. Stay there with our newsletter.