Mortgage refinance demand jumps 40% on Trump’s $200B bond-buying spree

Mortgage refinance demand jumped 40% higher last week after President Trump ordered a $200 billion bond-buying spree – briefly sending mortgage rates below 6% for the first time in years.

Refinance demand was 128% higher than the same week one year ago as homeowners rushed to take advantage of sinking 30-year fixed mortgage rates, which fell to 5.87% on Monday. 

“I am instructing my Representatives to BUY $200 BILLION DOLLARS IN MORTGAGE BONDS,” Trump wrote in a Jan. 8 post on Truth Social.

“This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable.”

Mortgage rates typically move very slowly, only inching down by hundredths of a percentage point a day – but they plummeted after Trump’s social media post.

Later that day, Federal Housing Finance Authority Director Bill Pulte said in a post on X that “Fannie [Mae] and Freddie [Mac] are the entities that will do the purchases.”

He also told reporters on Jan. 9: “We put in a $3 billion buy already.”

Total mortgage application volume soared 28.5% last week from the previous week, which was adjusted for the holiday, according to the Mortgage Bankers Association’s index.

Applications for a mortgage to purchase a home also rose 16% for the week and were 13% higher than the same week a year earlier, likely due to people returning after the holidays.

Mortgage rates have since bounced back above 6% as analysts anticipate higher oil prices. 

The rate on a 30-year fixed mortgage hit 6.10% on Wednesday, according to the Mortgage Research Center. The average 15-year fixed mortgage rate was 5.25% and a 30-year jumbo mortgage was 6.70%.

The massive bond-buying spree proposed by Trump would give lenders more money to lend to homebuyers – creating a higher supply of cash that allows interest rates to fall.

UBS analysts estimated the latest round of bond purchases could help push 30-year fixed mortgage rates down more than a fifth of a percent.

But the average rate of outstanding US residential mortgages is 4.4%, far below the rate for a new mortgage, so homeowners are incentivized to hold onto their properties.

Trump’s proposal would also only account for about 1.4% of the roughly $14.5 trillion mortgage market, according to JPMorgan Chase analysts.

“Similar to our view on President Trump’s post regarding a ban on institutional investors buying homes, we do not believe this initiative will have any significant impact on the housing market,” the analysts wrote in a note last week.

Trump also announced last week that he was taking steps to ban large investors from buying and then renting out single-family homes in an effort to lower the cost of homeownership.

Large investors and private-equity firms have bought up hundreds of thousands of single-family homes over the past decade. But the impact of Trump’s proposal has been scrutinized.

Firms that own 100 or more single-family homes only control about 2% of the nation’s single-family housing stock, according to John Burns Research and Consulting.