Ways Trump Can Control Mortgage Rates

Group 1 - President Trump has been pressuring the Federal Reserve to lower interest rates, including attempts to influence Fed chair Jerome Powell and other governors [1] - The Federal Reserve controls the federal funds rate, which influences short-term lending rates, but does not directly control mortgage rates, which are more closely tied to Treasury yields [2] - Reduced independence of the Fed could lead to increased Treasury yields as market trust diminishes, resulting in higher inflation expectations [3] Group 2 - The Federal Reserve can influence Treasury bond demand by purchasing them, which can lower yields and subsequently mortgage rates [4] - Increasing demand for mortgage-backed securities (MBS) through Fed actions can also lead to lower mortgage rates in the private market [5] - Slowing the runoff of existing MBS can decrease supply and spreads, resulting in lower mortgage rates for consumers [6] Group 3 - The idea of privatizing Fannie Mae and Freddie Mac could increase mortgage rates due to perceived higher risks, but a more strategic approach could be taken to lower rates [7]