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Posted on 01/08/2026 1:48:29 PM PST by Tell It Right
Biden ignored the Housing Market, and instead was immersed with High Crime, Open Borders, runaway INFLATION, the Afghanistan Disaster, and a Military that he left in Chaos and Confusion. Everything was broken, but I, as President of the United States, have already fixed it! Now, I am giving special attention to the Housing Market. Because I chose not to sell Fannie Mae and Freddie Mac in my First Term, a truly great decision, and against the advice of the “experts,” it is now worth many times that amount — AN ABSOLUTE FORTUNE — and has $200 BILLION DOLLARS IN CASH. Because of this, I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS. This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable. It is one of my many steps in restoring Affordability, something that the Biden Administration absolutely destroyed. We are bringing back the AMERICAN DREAM that was destroyed by the last Administration. MAKE AMERICA GREAT AGAIN!
(Excerpt) Read more at truthsocial.com ...
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Someone’s going to need to explain it to us financially ignorant types how buying mortgage bonds drives rates down...
I haven’t taken time to absorb or investigate how it’s supposed to work. Maybe some FReepers smarter than me can explain it.
Me too. Who are the ‘representatives’?
Looks like just way to inject cash or liquidity into the housing market lenders. Quantitative easing or subsidies to lower mortgage rates, improving affordability. Not exactly a capitalistic conservative concept, but hey, we will need the votes an improving housing market might deliver come November.
Wouldn't it be betters to use minions and familiars?
lol...
minions, indeed.
But the joke is on those traders who would jump on the Trump
financial bandwagon. If Trump is announcing this trade, it has
already been completed.
Is this Trump’s personal money or Fannie and Freddy money?
What part of the Constitution authorizes this? For that matter, what part of the Constitution authorizes Fannie Mae and Freddie Mac?
I believe the “my representatives” means Fannie Mae Freddie Mac, that Trump pointed out in the post wasn’t privatized. I believe his choice in the phrase “my representatives” is meant to say that, as head of the Executive Branch, he’s telling them what to do. Thus it’s Fannie Mae money buying the mortgage bonds, not taxpayers from the general fund, not Trump and his pals donating it like with the WH ballroom.
“Someone’s going to need to explain it to us financially ignorant types how buying mortgage bonds drives rates down...”
I don’t see how it will.
Mortgage rates are pretty much a reflection of 10 yr Treasury rates.
And those are determined by what whales in the bond buying world are willing to pay.
Buying $200 billion in mortgage bonds will free up cash for whomever owned those bonds, but there’s no direct connection to mortgage rates. Unless maybe they use all of that cash to buy a load of 10 yr Treasuries.
“Someone’s going to need to explain it to us financially ignorant types how buying mortgage bonds drives rates down...”
If there are a lot of buyers sellers will offer lower rates.
The US mortgage market is $1.7 trillion. $100 billion in purchases won’t make a lasting dent in rates. A new mortgagee isn’t going to accept a lower rate.
Meanwhile, I’m long FNMA and Federal Home Loan (FMCC) bounds and will be delighted to sell into a pop should it materialize.
1) See post # 11 on why I think "my representatives" means Fannie Mae. Not U.S. general fund money. Not Federal Reserve money. Not investors who support Trump.
2) A mortgage bond isn't a bond in mortgage firms (i.e. buying corporate bonds of banks). It's buying a hedge against people defaulting on their loans. In other words, it's like mortgage insurance to the banks (or other lenders). Basically he's telling Fannie Mae to provide $200 billion worth of MORE backing for mortgages than they're already doing.
3) IMHO this is bad in that it's the equivalent of the Dims pushing the Community Reinvesting Act regulations further and further to arm twist banks into lending to people they know can't (or won't) pay the mortgage payments. (Think 2008 mortgage meltdown, but maybe without the buying and repackaging of mortgages across speculators in tulip mania style.)
4) But it will encourage banks to lower interest rates because there will be less risk to make loans. Will that make people with good credit have even lower rates? I don't see how (maybe I'm wrong on this). But it will encourage people with lower credit will benefit. This perhaps younger people with good money habits but somewhat low credit scores because they're young and don't have as much credit history.
5) But may also include people who we'll know will try to game the system, not make payments, then shout from the mountain tops that they're victims of "predatory lending".
At least that's my 2 cents worth.
If they go into the market, the price of the bonds goes up; but the corresponding interest rates will drop. This means that new originators of bonds for mortgages will not need to charge a high interest rate.
(In the bond world the price of a bond and the interest rates that bond pays move in opposite directions.)
But having the government inject or absorb money in any market usually ends up with unintended consequences.
Yes, please do. And explain whether the government should be doing this at all.
From AI
Buying mortgage bonds drives interest rates down by increasing demand, which raises bond prices and lowers their yields (the return investors get), making mortgages cheaper for lenders to offer and homeowners to borrow, essentially injecting liquidity and signaling cheaper credit, especially when large buyers like the Federal Reserve buy large amounts of Mortgage-Backed Securities (MBS).
The Mechanism: Supply, Demand, and Inverse Relationship
Mortgage Bonds (MBS): Lenders bundle mortgages into securities (MBS) and sell them to investors, creating a secondary market for mortgages.
Increased Demand: When big players, like the Fed, buy these bonds, it’s like a huge buyer entering the market, increasing demand.
Price Up, Yield Down: Higher demand pushes the price of these bonds up. Because bond prices and yields (interest rates) have an inverse relationship, higher prices mean lower yields (less interest paid to the bondholder).
Lower Mortgage Rates: With lower yields on mortgage-backed securities, lenders can afford to offer lower interest rates to homebuyers to remain competitive and attract investment, making mortgages cheaper
He’s instructing Fannie Mae and Freddie Mac to add $200 billion to how much they are spending buying mortgages and selling them in bundled mortgage backed securities. To the extent that adds more liquidity to the home mortgage market there could be some lowering of mortgage interest rates. Fannie and Freedie buy about 70% of U.S. home mortgages. However, $200 billion is only about 10% of mortgages issued in 2025, so it may not make that big of an impact on mortgage rates.
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