BREAKING: Trump Directs GSEs to Buy $200B in MBS

[Andrew Postell]

Near today’s close, President Trump announced that Fannie Mae and Freddie Mac will purchase $200 billion of agency mortgage-backed securities to inject liquidity and push mortgage rates lower. The directive, confirmed by FHFA, aims to bolster affordability and stabilize housing markets ahead of the spring buying season. Analysts expect the move to compress MBS spreads and enhance secondary market liquidity, with potential rate relief of roughly 25 basis points, depending on execution speed.

Agency MBS rallied sharply versus Treasuries into the close, with UMBS 5s finishing +10/32nds. The 30-year fixed mortgage rate is holding near 6.16%, its lowest level since late 2024, and traders anticipate further downward pressure as GSE purchases ramp up. Liquidity conditions are improving, risk premiums are tightening, and sentiment is constructive for rate-sensitive assets.

This marks a significant policy shift signaling a more aggressive housing stance. Execution details—timing, PSPA constraints, and purchase cadence—will dictate the magnitude of rate compression. For now, expect modest rate declines and heightened focus on hedging strategies as markets digest this liquidity boost. Treasury yields were largely steady after hours, with the 10-year down 2 bps from the afternoon high. Tomorrow should be interesting as more details emerge on GSE purchase plans—plus the employment report at 8:30 ET.

Have a good night.