U.S. mortgage rates have fallen significantly this week following the Trump administration’s initiative to purchase mortgage-backed securities, aimed at boosting housing affordability. According to mortgage finance agency Freddie Mac, the average rate on the widely used 30-year fixed-rate mortgage has declined to 6.06%, marking the lowest level since September 2022. This represents a decrease from 6.16% the previous week, and a considerable drop from the 7.04% average recorded during the same period last year. Freddie Mac is a mortgage finance agency that plays a crucial role in the housing market by purchasing mortgages on the secondary market, securitising them, and selling them to investors. It aims to provide liquidity and stability to the mortgage market.
President Donald Trump last week instructed the Federal Housing Finance Agency (FHFA), which oversees Freddie Mac and Fannie Mae, another mortgage finance giant, to acquire $200 billion in bonds issued by these two companies. FHFA Director William Pulte indicated that the agency commenced purchases last week with an initial round of $3 billion. Fannie Mae is a government-sponsored enterprise and a major player in the secondary mortgage market. It buys mortgages from lenders, packages them into mortgage-backed securities, and sells them to investors, thereby increasing the availability of mortgage finance.
Trump’s administration is currently under pressure to reduce various costs, including housing expenses, as he and his Republican counterparts face a challenging battle to maintain control of the U.S. Congress in the upcoming mid-term elections. In addition to bond purchases, Trump has proposed a ban on institutional investors purchasing single-family homes, further impacting the housing market landscape.
The average rate on the 15-year fixed-rate mortgage also experienced a decrease, falling to 5.38% from 5.46% the previous week. This is also lower than the 6.27% average recorded during the same period last year, reflecting a broader trend of declining mortgage rates across various loan terms.
