Shares of major mortgage lenders soared on Friday, buoyed by President Donald Trump’s directive to inject liquidity into the housing market through a massive purchase of mortgage bonds.
The move, announced via social media on Thursday, aims to drive down interest rates and monthly payments, potentially revitalizing a sector strained by elevated borrowing costs. In his post, Trump called on unspecified “representatives” – leaving ambiguity as to whether this involves the Treasury Department, Fannie Mae, Freddie Mac, or another federal entity – to acquire $200 billion in mortgage bonds.
“This should bring down both rates and monthly payments, making home ownership more affordable,” Trump stated.
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He attributed the push to the substantial cash reserves held by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that purchase mortgages from originating lenders like banks and credit unions.
Federal Housing Finance Agency (FHFA) Director Bill Pulte swiftly responded on social media, affirming, “We are on it.” This quick acknowledgment underscores the administration’s intent to act promptly on the president’s instructions.
The market reacted quickly. Rocket Companies, a leading mortgage lender, climbed more than 6% to a new 52-week high. UWM Holdings, another key player, advanced over 8%, marking one of its strongest daily performances in the past year. PennyMac Financial Services rose approximately 5%. Even lenders with niche focuses benefited: Better Home & Finance, which emphasizes artificial intelligence in its operations, gained more than 2%. Opendoor Technologies, a real estate e-commerce platform that has garnered meme-stock status, surged over 16%.
Wall Street had anticipated some form of intervention from the Trump administration to curb rising mortgage rates, but the specifics have prompted a wave of analysis regarding consumer impacts and stock implications.
“We read this as the President ordering FHFA Director Bill Pulte to force Fannie Mae and Freddie Mac to buy $200 billion of their own MBS to bring down interest rates,” wrote Jaret Seiberg, an analyst at TD Cowen, referring to mortgage-backed securities.
Seiberg noted that the directive was “not a surprise,” aligning with broader expectations of policy actions to stimulate housing affordability.TD Cowen projects the 10-year U.S. Treasury yield could close 2026 at 3.5%, a decline from Friday’s level of about 4.17%. This shift would exert downward pressure on 30-year fixed mortgage rates, potentially reducing them to around 5.25% from the current 6.2%. If the $200 billion purchases are executed rapidly, rates could dip even further, approaching 5% by year’s end.
However, not all assessments were as optimistic. Tobin Marcus of Wolfe Research described the $200 billion program as “smaller than the firm previously anticipated,” suggesting its effect on the housing market would be “positive but fairly modest.” Rafe Jadrosich from Bank of America highlighted potential relief for prospective homebuyers, estimating that for every quarter-point drop in mortgage rates, the monthly payment on a $400,000, 30-year fixed loan could decrease by up to $70.Sector-specific outlooks varied among analysts.
Jeffrey Adelson at Morgan Stanley indicated that lower rates could propel UWM Holdings and Rocket Companies toward his more bullish scenarios. Terry Ma of Barclays identified PennyMac and UWM as offering the strongest risk-reward profiles for investors, cautioning that Rocket’s relatively high valuation multiple could hinder its upside.
“The volume levered names are the clear beneficiaries from an earnings perspective to the extent that these initiatives stimulate refinance and purchase origination activity in a meaningful way,” Ma explained in a note to clients.
The announcement also raises questions about its ripple effects on potential initial public offerings (IPOs) for Freddie Mac and Fannie Mae, both of which remain under federal conservatorship. Pulte told CNBC on Thursday that a decision on pursuing IPOs could come within the next month or two. Wolfe’s Marcus expressed skepticism, stating, “We have always thought that the path toward a transaction would be slower and messier than some investors seemed to be assuming in the post-election euphoria last year.”
Marcus further characterized the mortgage bond purchases as “the biggest and most obvious demand-side tool in the [White House’s] housing toolkit.” Yet, he tempered expectations, noting that the initial market response was underwhelming.
“It still looks to us like the White House doesn’t have a silver bullet for housing or for the ‘affordability’ problem more generally,” he concluded.
While the stock gains reflect optimism, the modest scale of the program suggests that broader economic factors – including Treasury yields and overall demand – will play a pivotal role in determining its ultimate success.