President Donald Trump announced on Truth Social that he plans to have Fannie Mae and Freddie Mac purchase $200bn in mortgage bonds, aiming to reduce mortgage rates and lower monthly payments for homebuyers. Fannie Mae and Freddie Mac are government-backed entities that buy mortgages from lenders to free up capital for new loans.
Experts consulted by The Independent generally agree that such a large bond purchase would drive down rates in theory. Steve Hill, a broker associate at SBC Lending, noted that the announcement alone has already lowered rates by 0.125 to 0.25 percentage points, potentially saving thousands on a typical mortgage.
However, experts caution that the impact may be short-lived and uncertain. Kevin Watson of Churchill Mortgage emphasised that no bonds have yet been purchased, and the current market reaction is based solely on the announcement. Andrew Cooke of Optimist Capital predicted any rate drop would last less than a year, and lenders may still raise rates for individual borrowers due to persistent cost-of-living pressures and risk assessment.
Individual factors such as credit history, income, and debt-to-income ratio will continue to determine the rates borrowers are offered, regardless of wider market moves. The plan, while potentially beneficial, does not eliminate the risks lenders face when approving mortgages.
