Trump's $200 Billion MBS Move: A Bold Bid to Tackle Housing Costs

U.S. President Donald Trump has announced plans to buy $200 billion in mortgage bonds to reduce housing costs. Despite limited cash reserves, agencies like Fannie Mae and Freddie Mac are believed to have enough liquidity to execute this directive. Experts anticipate only a modest impact on mortgage rates.

In a move aimed at alleviating housing costs, U.S. President Donald Trump has ordered the purchase of $200 billion in mortgage bonds. The plan, announced via Truth Social, follows Trump's decision not to sell Fannie Mae and Freddie Mac in his first term, with the assets now valued substantially higher.

Federal Housing Finance Agency Director Bill Pulte confirmed the directive, stating that Fannie Mae and Freddie Mac, despite showing less than $17 billion in combined cash on their latest balance sheets, have sufficient liquidity to support this initiative. The agencies are said to have nearly $100 billion each in available funds, taking into account additional assets.

Though the exact timeline for the bond purchases remains undisclosed, Pulte is optimistic about the move's potential to lower mortgage rates and rejuvenate the housing market. However, economists like Redfin's Chen Zhao caution that the impact on rates may be minimal, echoing concerns over Trump's broader economic strategy.

(With inputs from agencies.)