President Trump demanded in a Truth Social post that Fannie Mae and Freddie Mac purchase $200 billion in mortgage bonds, claiming that this move would push down mortgage interest rates. So, this raises the question: Will it actually lower mortgage rates? It already has. Here's what it all means. Fannie Mae, Freddie Mac, and mortgage bonds explained First, some background. Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that back the funding of mortgages issued by private lende ...

Group 1 - Bill Ackman has proposed a method to lower mortgage rates in the U.S. by introducing prepayment penalties on government-backed home loans [1][2] - The proposal involves Fannie Mae and Freddie Mac offering non-prepayable mortgages, which would require borrowers to pay a penalty for prepayment [2] - Ackman estimates that this change could save borrowers approximately 65 basis points on a 30-year mortgage [3] Group 2 - The proposal is timely as U.S. mortgage rates have been a concern, with recent actions leading to a decrease in the average 30-year fixed mortgage rate below 6% for the first time since 2022 [5] - Ackman has previously suggested merging Fannie Mae and Freddie Mac to minimize mortgage spread risks and unlock value [6]

Core Insights - Mortgage rates have fallen below 6% for the first time in years due to President Trump's directive to purchase $200 billion in mortgage bonds, aimed at reducing costs for Americans facing high living expenses [1][3] - The average interest rate for a 30-year fixed mortgage dropped to 5.99%, down from 6.21%, marking the lowest rate since February 2023 [1][2] Mortgage Rate Trends - The average 30-year mortgage rate has decreased by more than 1% over the past year, with the 15-year fixed rate mortgage also seeing a significant drop to 5.55% [2] - The recent changes in mortgage rates are unusual, as they typically fluctuate slowly [2] Government Actions - Trump's announcement led to an immediate reduction in mortgage rates, with the Federal Housing Finance Authority indicating that Fannie Mae and Freddie Mac would execute the bond purchases [3][5] - Fannie Mae and Freddie Mac currently hold over $230 billion in mortgage securities, and an additional $200 billion purchase would nearly double their holdings [4] Market Dynamics - The purchase of bonds by Fannie Mae and Freddie Mac increases the liquidity for lenders, allowing them to lend more to homebuyers, which generally leads to lower mortgage rates [5] - Analysts at UBS suggest that Trump's bond buying plan could reduce 30-year fixed mortgage rates by more than 0.2%, potentially boosting new construction and existing home sales [6] Limitations of the Plan - The average interest rate for existing residential mortgages is 4.4%, which may limit the impact of the bond buying plan on homeowners reluctant to sell due to lower rates [7] - JPMorgan Chase analysts noted that $200 billion in mortgages represents only about 1.4% of the $14.5 trillion mortgage market, suggesting limited overall market impact [8]

Core Insights - Mortgage rates have decreased significantly, with the average 30-year rate now at 6.27%, down from 7.19% in 2023, making homeownership more affordable in many U.S. cities [1] - A combination of lower rates, increased inventory, and slower price growth has led to reduced monthly mortgage payments, with buyers saving thousands annually in some cities [2] Summary by Category Mortgage Rate Changes - The average 30-year mortgage rate has dropped to 6.27% from 7.19% in 2023, indicating a favorable shift for potential homeowners [1] Monthly Payment Analysis - A study by Zoocasa analyzed average monthly mortgage payments in 100 cities, comparing September 2025 to September 2023, revealing significant savings for buyers [3] - In North Port-Sarasota, Florida, the average mortgage payment decreased from $2,848 in 2023 to $2,278 in 2025, a reduction of $570 [4] - Cape Coral-Fort Myers, Florida saw a drop from $2,382 to $1,904, saving buyers $477 [6] - Denver's average mortgage payment fell from $2,688 to $2,289, resulting in a $399 savings [7] - Other notable reductions include Austin, Texas with a decrease of $355, and Raleigh, North Carolina with a payment of $2,330 in 2025 [8][10]

Mortgage Rates and Market Impact - The average rate on a 30-year US mortgage fell to 6.26%, the lowest since early October, down from 6.35% last week and 6.09% a year ago [6] - Rates on 15-year fixed mortgages eased to 5.41% from 5.5% last week, compared to 5.15% a year ago [6] - Mortgage rates have declined since late July due to expectations of Federal Reserve rate cuts, with a quarter-point cut delivered recently and projections for two more reductions this year [6] Refinancing Surge - The decline in mortgage rates has led to a nearly 30% increase in mortgage applications last week compared to the prior week, with refinancing loans making up nearly 60% of the total [5] - Homeowners who took loans when rates were above 6% are particularly driving the surge in refinancing [5] - Demand for adjustable-rate mortgages (ARMs) rose sharply, accounting for about 13% of all applications, the highest share since 2008 [5] Market Outlook - The easing of mortgage rates is expected to support a modest pickup in home sales in the coming months, although the broader impact may be limited as 81% of homeowners hold mortgages below 6%, reducing incentives to sell or move [6]