According to data from Mortgage News Daily, the rate on 30-year fixed mortgages fell 22 basis points (bps) to 5.99% while the rate on 15-year fixed mortgages dropped 19 bps to 5.55%.
- On Thursday, President Donald Trump announced that he would be instructing representatives to buy $200 billion in mortgage bonds from Fannie Mae and Freddie Mac.
- Analysts estimate that the decision could lower mortgage rates further.
- Housing stocks climbed higher on Friday in response to the news.
Mortgage rates in the U.S. declined steeply on Friday on an announcement from President Donald Trump regarding instructing representatives to purchase $200 billion in mortgage bonds from Fannie Mae and Freddie Mac.
According to data from Mortgage News Daily, the rate on 30-year fixed mortgages fell 22 basis points (bps) to 5.99%, the lowest it has been since Feb. 2023. Meanwhile, the rate on 15-year fixed mortgages dropped 19 bps to 5.55%, the lowest it has been in more than a year.
In a Truth Social post on Thursday, Trump said that he would be giving special attention to the housing market, and was instructing representatives to purchase $200 billion in mortgage bonds.
“This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable,” he said. However, Trump did not provide a timeline for the same.
Impact On Mortgage-Backed Securities
Analysts estimate that the government’s decision to purchase mortgage bonds from Fannie Mae and Freddie, which buy loans from lenders and sell them as bundled mortgage-backed securities (MBS) to investors, could lower mortgage rates further.
As per a report from CNBC, analysts see a 25 bps to 50 bps decline. UBS analysts predict that a $200 billion purchase of MBS could lead to about 10-25 bps decline in mortgage rates, reducing the present 30-year headline mortgage rate to 6.0%, according to CNBC.
Meanwhile, a separate CNBC report noted that TD Cowen anticipates 30-year fixed mortgage rates to come down to about 5.25%. The firm also noted that if the $200 billion mortgage bond purchases happened quickly, rates could be near 5% at the end of the year.
Ivy Zelman, executive vice president of research and securities at Zelman, believes that the move will help psychologically. He said that the move would bring more people into the market, especially those who didn’t know builders were offering mortgage rate buy downs.
How Are Housing Stocks Reacting?
Housing stocks climbed higher on Friday in response to the news. Real estate ecommerce company Opendoor Technologies (OPEN) was among the biggest gainers in the industry, rising over 17% in Friday’s mid-day trade.
Meanwhile, mortgage lender Rocket Companies (RKT) traded nearly 8% higher in the same time while UWM Holdings (UWMC) gained over 12.8%. AI-driven lender lender Better Home & Finance (BETR) rose nearly 11%.
On Stocktwits, retail sentiment around OPEN stock and RKT stock remained in the ‘extremely bullish’ territory over the past day amid ‘extremely high’ message volumes.
OPEN shares have gained over 412% in the last one year, RKT shares have risen over 122% and BETR shares have increased over 394% in the same time. Meanwhile, UWMC shares declined 2.5%.
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