Trump's $200 billion mortgage-bond plan may lower mortgage rates

President Trump announced a plan to have his "representatives" buy $200 billion in mortgage-backed securities, and the average 30-year rate fell from about 6.21% to 5.99% after the announcement.

President Donald Trump announced a plan to instruct his "representatives" to purchase $200 billion in mortgage-backed securities, posting the proposal on Truth Social. The proposal is presented as a way to lower mortgage rates amid concerns about housing affordability. Economists and housing analysts say the mechanics, timing, and likely scale of the purchases are unclear. Some experts also warn that lower rates without more housing supply could push home prices higher. Key points: - The announcement was followed by a drop in the average 30-year fixed mortgage rate from about 6.21% to 5.99%, according to Mortgage News Daily. - Zelman & Associates estimated rates could fall slightly below 6% under the plan, and a Realtor.com economist estimated the move could lower rates by up to 50 basis points. - Analysts noted uncertainty about what Trump meant by "representatives," and Zelman said timing and the purchase mechanism were unclear. - The mortgage-backed securities market is roughly $9 trillion in size, so $200 billion would represent a relatively small share of the total outstanding market, analysts at Deutsche Bank and others said. - The Federal Reserve currently holds around $2 trillion in mortgage-backed securities, a scale that commentators used as a reference point for impact. - Several economists cautioned the policy could have only a modest and short-lived effect, and that the longer-term housing affordability issue is driven largely by limited supply, which some estimates place as a shortage of about 5 million homes. Summary: The announcement coincided with a measurable drop in mortgage rates, but experts say the plan's unclear timing and limited scale make its long-term impact uncertain. Undetermined at this time.