Trump's Mortgage Bond Purchase Plan Shows Limited Impact on Housing Affordability
Trump's $200 billion mortgage-backed securities purchase program has shown limited impact on housing affordability, with 30-year rates declining to 6.15% by end-2025 from nearly 8% in late 2023. Economists argue insufficient housing supply, not financing issues, represents the core market challenge. Rising Treasury yields amid global market turbulence and geopolitical tensions threaten to offset any marginal gains from the bond purchase initiative.
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President Trump's plan to improve housing affordability through large-scale mortgage-backed securities purchases has delivered only limited results, with economists questioning whether bond-buying measures can address the fundamental supply constraints plaguing the U.S. housing market.
Limited Impact Despite $200 Billion Commitment
The administration's mortgage bond purchase program, targeting up to $200 billion in securities, has produced marginal effects on borrowing costs according to Reuters analysis. While mortgage bond yields have narrowed slightly relative to U.S. Treasury yields, the overall impact on affordability remains constrained.
| Metric | Late 2023 | End-2025 | Change |
|---|---|---|---|
| 30-Year Mortgage Rate | Just under 8.00% | 6.15% | -1.85 percentage points |
| Fed Mortgage Portfolio | $2.70 trillion (mid-2022) | ~$2.00 trillion | -$0.70 trillion |
Economists broadly agree that insufficient housing supply, rather than financing constraints, represents the primary challenge facing the market. This structural issue limits the effectiveness of demand-side interventions like bond purchases.
Federal Reserve Balance Sheet Dynamics
Treasury Secretary Scott Bessent has indicated the mortgage bond purchases partly aim to counteract the Federal Reserve's ongoing reduction of mortgage-backed securities holdings. The Fed's portfolio has declined significantly as bonds mature without reinvestment.
However, central banking experts question this rationale, noting that balance-sheet policy impacts typically occur at announcement rather than during gradual reductions. Most analysts find little evidence that the Fed's measured pace of mortgage bond runoff has meaningfully elevated borrowing costs.
Market Headwinds Challenge Progress
Despite recent improvements in refinancing activity reaching multi-month highs, broader market forces threaten to offset gains from the purchase program. The 10-year U.S. Treasury yield has climbed to multi-month highs amid:
- Global bond market selloffs triggered by Japanese market turbulence
- Geopolitical tensions from trade threats and diplomatic confrontations
- Reduced demand for U.S. Treasury securities
These factors have the potential to push borrowing costs higher, undermining limited benefits from mortgage bond purchases.
Operational Details Remain Limited
The Trump administration has confirmed mortgage bond purchases are underway but disclosed few operational specifics. The Federal Housing Finance Agency has declined to provide information on purchase pace or total volumes completed.
Federal Reserve officials have expressed indirect skepticism about bond purchases resolving affordability issues, consistently pointing to structural supply constraints in major housing markets as the dominant factor maintaining elevated prices.
Outlook for Housing Affordability
While the Mortgage Bankers Association reports rates declined to their lowest levels since September 2024, affordability pressures remain significant across most markets. The administration's strategy may provide short-term marginal relief, but without meaningful housing supply expansion, material affordability improvements for most Americans appear unlikely.
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