Mortgage Rates Dropped Following New Federal Bond Purchases
Homeowners and buyers saw interest rates dip to 5.95 percent after a government mortgage bond purchasing program launched.
Updated on Sept. 18, 2026 in Residential
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Mortgage rates eased to 5.95 percent after President Trump directed Fannie Mae and Freddie Mac to begin a $200 billion mortgage-backed securities purchasing program on January 8, 2026. This initiative aims to reduce borrowing costs for prospective buyers and current homeowners by increasing liquidity in the housing market.
Why it matters
The program was established to drive down borrowing costs, with projections suggesting it will shave 10 to 25 basis points off 30-year mortgage rates. This shift provides relief for households after mortgage rates reached nearly 8 percent in 2024.
By January 31, 2026, Fannie Mae and Freddie Mac added $12.5 billion in mortgage-backed securities to their portfolios toward a $200 billion target. Each entity is now authorized to hold up to $225 billion in mortgage bonds.
The players
President Trump
The current President of the United States who directed the mortgage-backed securities purchase program.
Federal Housing Finance Agency
The regulator that oversees government-sponsored enterprises and set the mortgage-backed securities purchase goal.
Fannie Mae
A government-sponsored enterprise that manages mortgage-backed securities portfolios to support housing liquidity.
Freddie Mac
A government-sponsored enterprise that manages mortgage-backed securities portfolios to support housing liquidity.
The details
The Federal Housing Finance Agency authorized the government-sponsored enterprises to use existing liquidity to fund these purchases, effectively replacing bond runoff from the Federal Reserve balance sheet. The Federal Reserve currently lets approximately $15 billion in bonds roll off its portfolio each month. This strategic move is designed to stabilize the market and lower interest rates for consumers.
Timeline
January 8, 2026: President Trump directed the mortgage-backed securities purchase program.
January 31, 2026: Fannie Mae and Freddie Mac added $12.5 billion in mortgage-backed securities to their portfolios.
The Home Front
This purchasing program marks a departure from recent years where the Federal Reserve reduced its $2 trillion mortgage-backed securities portfolio. It specifically aims to counter the high-rate environment that caused mortgage costs to surge toward 8 percent in 2024.
Homeowners currently holding high-interest loans should monitor whether these rate shifts provide an opportunity to refinance. Prospective buyers should consult with a licensed mortgage professional to assess if current rate movements impact their individual borrowing power.
The takeaway
The move by the Federal Housing Finance Agency aims to stabilize the market and lower borrowing costs for homeowners across the nation. Keep track of current mortgage rate trends and consult with a licensed mortgage broker to see how these market changes affect your specific financial situation.
Further reading
Learn more about home financing trends in the Residential section.
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Do you believe government intervention in the mortgage market will help make home ownership more affordable?
