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Trump’s surprise announcement pushes rates below 6% — at least for now

President Donald Trump announced last week on his social media platform that he directed mortgage giants Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities.

“I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS,” Trump wrote.

That was followed by a post on X from Bill Pulte, the overseer of Fannie Mae and Freddie Mac, that “Fannie and Freddie will be executing” the order.

Mortgage rates, already at a 15-month low of 6.24% before Trump’s Truth Social post, plunged below the 6% mark on that bit of news.

Fannie and Freddie are the government-sponsored enterprises that back about two-thirds of U.S. home loans. Those mortgages are packaged as securities and sold to the Federal Reserve, pension funds and other institutional investors. So, while your home loan might be originated by a lender such as Rocket, loanDepot or Wells Fargo, or by an independent mortgage broker, it soon is turned into a mortgage bond owned by an investor. If the government steps in and buys additional bonds based on mortgages, the increased demand for home loans could lead to lower rates.

Mortgage rates indeed dipped on Trump’s proposal. But there was skepticism within the industry that the move would create sustained relief for borrowers.

“In my opinion, the $200 billion purchase is likely to produce a temporary and limited reduction in mortgage rates,” says Sean Salter, a finance professor at Middle Tennessee State University. “Unless there is coordination with and support from monetary-policy actions via the Federal Reserve, and/or fiscal-policy actions from Congress, the effects of Trump’s announcement will likely not be highly impactful or long-lasting.”

While $200 billion sounds like a lot, it’s just a tenth of the amount of mortgage-backed securities owned by the Fed, which holds $2 trillion in such instruments. For another bit of context, Americans took $1.6 trillion in “conventional” loans — those backed by Fannie and Freddie — in 2024. So $200 billion represents less than three months of annual mortgage volume.

Learn more: Weekly mortgage rate trend predictions

The rates you see advertised here might not match the rate you're offered due to factors like your credit score, down payment and more. Still, getting the best rate can make a big difference in your monthly budget, and potentially save you thousands of dollars in interest over the life of the loan. It’s been proven: Shopping with multiple lenders can save you up to $1,200 a year.

Follow these steps when comparing mortgage rates:

• Ensure you’re comparing apples to apples. If one rate seems significantly higher or lower than another, make sure it’s for the same type of product — for example, a 30-year, conventional loan — and that you’re comparing an interest rate to an interest rate or an annual percentage rate (APR) to an annual percentage rate.
• Look at APR and mortgage rate. Your mortgage rate is one cost of borrowing money, but your APR includes that as well as other fees associated with your loan, making it a more complete picture of the actual cost. Some lenders charge lower rates but higher fees on mortgages.
• Get quotes from different types of lenders. You may find different costs from a local bank or credit union compared with a national bank or an online lender. 

Factors that determine your mortgage rate

Your mortgage rate depends on a number of factors, including your individual credit profile and what’s happening in the broader economy. These variables include:

• Your credit and finances: The better your credit score and higher your income compared to your debt, the better the interest rate you’ll get. Borrowers with scores of 740 or above tend to qualify for the best rates.
• Loan size and type: The size of your loan, down payment and the type of loan all affect your mortgage rate. Smaller loans with higher down payments represent less risk for the lender, so they tend to get better rates. Certain types of loans which are perceived as less risky — for example, a loan for a single-family home that will be used as a primary residence — also qualify for lower rates. 
• Location: Rates vary based on where the property is located.
• Whether you’re a first-time homebuyer: Many first-time homebuyer loan programs offer lower-rate mortgages.
• Economic factors: Broadly, mortgage rates are impacted by forces like the Federal Reserve, inflation and investor appetite.
• The lender you work with: Lenders set rates based on many factors, including their own supply and demand.
• Mortgage points: Also known as discount points, these additional fees reduce your interest rate. Decide whether they're worth it with our guide to mortgage points.

How does the Federal Reserve affect mortgage rates?

Like any other financial product, mortgage costs may fluctuate with economic events, including Federal Reserve decisions. The central bank doesn’t set mortgage rates, but its policies set the tone for what banks and other lenders charge for loans. If the Federal Reserve lowers its benchmark rate, the rates on other types of loans often — but not always — follow suit. The reverse is true, too. When the Fed raises the rate — as it did after the pandemic — mortgage rates tend to increase. 

However, mortgage rates are more closely tied to other measures, like the yield on 10-year Treasury notes. So it’s not unusual to see mortgage rates move in the opposite direction as the Fed, either, especially in small increments and over short periods of time. 

The Federal Reserve capped off 2025 with three consecutive quarter-point cuts to its benchmark rate. Bankrate experts expect further cuts in 2026, which could — eventually — move mortgage rates lower. 

How to refinance your current mortgage

Before you start applying for a mortgage, here are some mortgage resources to prepare you for the process: