Housing stocks rise after Trump calls for $200 billion mortgage bond purchase
Housing-related stocks rose in after-hours trading yesterday, and remained in the green early on Friday, after President Trump said he would direct a large-scale purchase of mortgage bonds in a bid to lower borrowing costs.
In a Truth Social post yesterday, Trump said he is instructing his “Representatives” to buy $200 billion in mortgage bonds, arguing the move will “drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable.” The purchase will be executed by Fannie Mae and Freddie Mac, per an X post by Bill Pulte, director of the Federal Housing Finance Agency, which oversees the two firms.
Shares of mortgage lenders surged early Friday, with Rocket Companies and UWM Holdings both up around 6% as of 7 a.m. ET and LoanDepot rising as much as 16.8%. Online real estate platform Opendoor Technologies jumped 8.4%, while home builders like Lennar saw more modest gains.
According to Trump’s post, Fannie Mae and Freddie Mac are “now worth many times” what they were in his first term — a result he attributed to his decision not to sell the firms — creating “AN ABSOLUTE FORTUNE” and leaving them with “$200 BILLION DOLLARS IN CASH.”
Filings suggest that figure may refer more to liquidity than cash on hand. Per Reuters, Fannie Mae and Freddie Mac held less than $17 billion in combined cash and cash equivalents as of September 30, though they control ~$192 billion when including other liquid assets. Pulte told Reuters that the firms have “ample liquidity” to carry out Trump’s purchase order.
The Wall Street Journal also noted that the companies do have room on their balance sheets to add mortgage bonds: each is permitted to hold up to $225 billion in mortgage-backed securities, but together hold about $247 billion as of November, leaving roughly $200 billion in remaining capacity.
While the impact on mortgage rates remains uncertain, economists estimate the purchase would likely put some downward pressure by around 0.25 percentage points, while others predict a smaller effect of roughly 0.10 to 0.15 percentage points.
The move comes as Trump has promised to unveil “some of the most aggressive housing reform plans in American history” in a December address. Earlier this week, he said he would ban large institutional investors from buying single-family homes to ease the housing shortage.
The US housing market remains deeply strained, with home sales having fallen to their lowest since the 1990s and homeowners experiencing the worst lock-in effect in more than four decades. Thirty-year mortgage rates remain elevated, now hovering around 6.2%.
According to Trump’s post, Fannie Mae and Freddie Mac are “now worth many times” what they were in his first term — a result he attributed to his decision not to sell the firms — creating “AN ABSOLUTE FORTUNE” and leaving them with “$200 BILLION DOLLARS IN CASH.”
Filings suggest that figure may refer more to liquidity than cash on hand. Per Reuters, Fannie Mae and Freddie Mac held less than $17 billion in combined cash and cash equivalents as of September 30, though they control ~$192 billion when including other liquid assets. Pulte told Reuters that the firms have “ample liquidity” to carry out Trump’s purchase order.
The Wall Street Journal also noted that the companies do have room on their balance sheets to add mortgage bonds: each is permitted to hold up to $225 billion in mortgage-backed securities, but together hold about $247 billion as of November, leaving roughly $200 billion in remaining capacity.
While the impact on mortgage rates remains uncertain, economists estimate the purchase would likely put some downward pressure by around 0.25 percentage points, while others predict a smaller effect of roughly 0.10 to 0.15 percentage points.
The move comes as Trump has promised to unveil “some of the most aggressive housing reform plans in American history” in a December address. Earlier this week, he said he would ban large institutional investors from buying single-family homes to ease the housing shortage.
The US housing market remains deeply strained, with home sales having fallen to their lowest since the 1990s and homeowners experiencing the worst lock-in effect in more than four decades. Thirty-year mortgage rates remain elevated, now hovering around 6.2%.
