Micron Technology(US:MU) Fastcompany·2026-01-09 21:21Core Viewpoint - President Trump announced that Fannie Mae and Freddie Mac will purchase an additional $200 billion in mortgage bonds to lower mortgage rates and make home ownership more affordable [1]. Group 1: Government Sponsored Enterprises (GSEs) Actions - Fannie Mae and Freddie Mac are instructed to buy $200 billion in mortgage bonds, which is expected to drive down mortgage rates and monthly payments [1]. - The GSEs have already increased their retained mortgage holdings by approximately $69 billion in the second half of 2025 [6]. - If the GSEs add another $200 billion in mortgage bond holdings in 2026, they would approach their legal limit of $450 billion, with $225 billion for each [7]. Group 2: Market Dynamics - Long-term yields, such as the 10-year Treasury yield and the average 30-year fixed mortgage rate, are influenced by the demand for underlying bonds, with yields moving inversely to bond prices [1]. - The "mortgage spread," which is the difference between the 10-year Treasury yield and the average 30-year fixed mortgage rate, peaked at 2.96 percentage points in June 2023, significantly above the historical average of 1.76 percentage points since 1972 [5]. - The goal of the $200 billion purchase is to accelerate the compression of the "mortgage spread," which has already decreased to 2.05 percentage points by December 2025 [6]. Group 3: Historical Context and Federal Reserve Actions - Prior to the Great Financial Crisis, Fannie Mae and Freddie Mac were significant buyers of mortgage-backed securities (MBS), providing stability to the market [9]. - The Federal Reserve took on the role of market stabilizer after the GSEs went into conservatorship, purchasing $1.25 trillion in agency MBS between January 2009 and March 2010 [9]. - The Federal Reserve's pivot to quantitative tightening in March 2022 removed a major buyer from the MBS market, leading to increased volatility and higher mortgage rates [11].