Trump Administration's $200 Billion Housing Loan Interest Rate Reduction Strategy: Direct Intervention in America's Housing Crisis

President Trump of the United States has made a bold policy decision to address the tense housing market situation. He announced the initiation of a $200 billion mortgage-backed securities (MBS) purchase plan. This move is not merely aimed at lowering mortgage interest rates but signifies a direct intervention in the overall U.S. economy, which market participants are calling “personal quantitative easing.”

Trump publicly stated on his social media platform, Truth Social, that he had “instructed” officials at the Federal Housing Finance Agency to purchase $200 billion worth of mortgage bonds. This measure aims to lower mortgage rates and monthly payments, improve homebuying capacity, and shift the current crisis onto the previous Biden administration.

Emergency Response to a Historic Housing Crisis: Why Now, Large-Scale MBS Purchases?

The challenges facing the U.S. housing market are complex. With inflation remaining high and living costs rising, many households are losing their ability to purchase homes. Currently, the 30-year fixed mortgage rate in the U.S. remains at 6.16%, a level that imposes a significant burden on ordinary citizens.

The background for the Trump administration’s decision to undertake large-scale policy intervention at this point stems from a sense of crisis over the severe stagnation in the housing market. The Federal Reserve has already cut interest rates by 75 basis points, but real improvements in rates are still not materializing.

Fannie Mae and Freddie Mac Implement the Plan: How the $200 Billion MBS Purchase Works

Bill Plute, Director of the Federal Housing Finance Agency, confirmed in an interview with the Financial Times that the primary implementers of this plan are Fannie Mae and Freddie Mac, and that congressional approval is not required.

Under existing agreements, both agencies have approximately $200 billion of capacity for mortgage investments, within which this purchase will be executed. In other words, this policy is structured to be immediately implementable within the scope of executive authority.

Comparing to 2008: A New Turning Point in U.S. Interest Rate Policy

Formally, this policy closely resembles the MBS purchase programs implemented by the Federal Reserve after the 2008 financial crisis, when aggressive asset purchases were carried out to stabilize markets. However, Trump’s decision carries a different significance.

This is not merely a market stabilization measure through financial institutions but a direct economic intervention via executive authority, also serving as a political maneuver to garner voter support. By achieving tangible results such as lowering mortgage rates, the strategy aims to win public trust and support. The resolution of the housing crisis thus becomes a focal point where politics and economics intersect, holding the potential to significantly influence the future direction of U.S. economic policy.