Trump orders mortgage bond purchases to lower rates. These stocks are jumping in response

• TD Cowen expects 30-year mortgage rates could drop from current 6.2% to roughly 5.25% by year-end, or closer to 5% if purchases happen quickly
• Each quarter-point decline in mortgage rates would reduce monthly payments on a $400,000 loan by up to $70, according to Bank of America estimates
• Wolfe Research called the $200 billion program 'smaller than anticipated' with likely 'positive but fairly modest' impact, while questions remain about potential Fannie Mae and Freddie Mac IPOs

Trump Orders $200B Mortgage Bond Purchase Program; Lender Stocks Rally

President Donald Trump directed government representatives to purchase $200 billion in mortgage-backed securities to lower mortgage rates and improve home affordability. Federal Housing Finance Agency Director Bill Pulte confirmed action is underway, with Fannie Mae and Freddie Mac—government-sponsored entities currently holding substantial cash reserves—expected to execute the purchases.

Market Response:

Mortgage lender stocks rallied sharply on the announcement:

• United Wholesale Mortgage (UWM) jumped over 6% to a 52-week high
• Rocket Companies surged more than 8%, posting one of its best sessions in a year
• PennyMac rose approximately 5%
• Real estate platform Opendoor spiked over 16%
• AI-focused lender Better.com gained over 2%

Rate Projections:

TD Cowen forecasts mortgage rates could drop from the current 6.2% to approximately 5.25% by year-end 2026, or potentially closer to 5% if the $200 billion is deployed rapidly. They project the 10-year Treasury yield falling to 3.5% from 4.17%. Bank of America estimates each quarter-point rate decline would reduce monthly payments on a $400,000 30-year mortgage by up to $70.

Analyst Perspectives:

While the move was anticipated, opinions vary on its impact. Wolfe Research's Tobin Marcus called the $200 billion figure "smaller than expected," suggesting a "positive but fairly modest" housing market impact. Barclays highlighted volume-leveraged names like PennyMac and UWM as best positioned, while noting Rocket's high valuation as a concern.

IPO Implications:

The initiative may complicate potential IPOs for Fannie Mae and Freddie Mac, currently in federal conservatorship. Pulte indicated Trump could decide on GSE IPOs within 1-2 months.