New York Mayor Zoran Mamdani issues first executive order
New York City’s new mayor, Zoran Mamdani, announced an executive order targeting housing while revoking past orders such as the IHRA’s definition of anti-Semitism.
President Donald Trump’s recent proposal for Fannie Mae and Freddie Mac to buy mortgage bonds to lower the cost of home loans is unlikely to help average Americans struggling with homeownership and could harm financial markets, many observers say.
On January 8, President Trump said on Truth Social that he was directing his “representatives” to buy “$200 billion in mortgages,” referring to Fannie and Freddie. Shortly after, Bill Pelt, a Trump appointee who oversees the agency that regulates both companies, said, “That’s it!”
This is the second time this week that the president has signaled some form of policy intervention in the housing market, where a long-term lack of new construction has made homes unaffordable for many Americans. On January 7, President Trump said he wanted to ban institutional investors from purchasing single-family homes.
Philippe Basil, director of economic growth and financial stability at Better Markets, said the White House has “obviously lost the narrative when it comes to financial markets.” “If you want to lower interest rates, you start with the Treasury market. The Treasury market is the foundation of everything. The White House is pursuing the exact opposite of what they should be doing.”
Fannie and Freddie play an important role in the housing market, but they are often misunderstood. They are buying mortgages from banks and other lenders, which allows those companies to get back on their feet and extend more credit to other borrowers. Fannie and Freddie consolidate their loans into bonds to reduce risk.
Investors such as pension funds and insurance companies buy bonds and receive a steady income. This process is fueling a booming mortgage market that has about $13.5 trillion in outstanding debt, according to a recent Urban Institute analysis. This allows borrowers with good credit to work with a lender to take out a mortgage for up to 30 years, but with the ability to refinance at any time during the life of the loan.
According to a 2025 analysis by USA TODAY’s ICE Mortgage Technology, mortgage rates are likely to follow the same path as 10-year U.S. Treasuries, in part because the average remaining term of a mortgage is 6.3 years.
Bond yields are rising in part because the U.S. government is running a large budget deficit, which has only been made worse by the 2025 tax and spending bill signed by President Trump.
“Increasing debt and deficits will cause interest rates to rise,” Yale University’s Institute for Budget Research wrote last July, when the bill was signed. “By 2054, the 10-year Treasury yield will be 1.4 percentage points higher than it would have been had the bill not passed.”
Corey Freyer, director of investor protection for the nonpartisan Consumer Federation of America, said bond investors are also likely to shy away from financial markets that they believe are too influenced by politicians.
“It’s a problem again when Mr. Trump believes he can unilaterally direct an independent agency and the head of that agency doesn’t question Mr. Trump, even though the policy direction may benefit borrowers,” Freyer told USA TODAY.
Buy mortgage bonds to avoid a housing crisis
Housing finance experts say buying mortgage bonds has been a way to stabilize the housing market in the past, but it was done by the Federal Reserve, not Mr. Fannie or Mr. Freddie. Furthermore, this measure was taken during times of extreme crisis, such as the aftermath of the 2008 financial collapse and the coronavirus lockdown.
The central bank’s huge balance sheet allows it to buy far more than the president has suggested. The Fed, for example, purchased $2.5 trillion in mortgage bonds between 2020 and 2022, according to a Redfin analysis.
“It is unclear what policy issues President Trump intends to resolve within the FHFA’s jurisdiction,” Peter Conti-Brown, a professor of financial regulation at the Wharton School at the University of Pennsylvania, said in an email to USA TODAY.
“If the answer is that interest rates are simply too high, then we should all be alarmed. If successful, this effort would dramatically undermine the independence of the Federal Reserve, which controls monetary policy through its primary mechanism, interest rates.”
After all, most housing watchers say the biggest reason homes are unaffordable is lack of supply, not financing costs. The 30-year fixed rate for the past week was 6.16%, down from recent highs and well below the long-term average of about 7.70%.
“The pandemic housing boom is over and new home construction is back to very low levels, meaning this housing shortage will likely continue to get worse,” said Darryl Fairweather, chief economist at Redfin. “I think what I really want the government to talk about is how do we get more housing supply in the places where people want to live most?”
“What we need to do is work hard on fundamental policies to support the housing market,” said Better Markets’ Basil. “These kinds of stopgap fixes don’t work. They only increase the moral hazard and put[Fanny and Freddie]in a more precarious position.”
And Freyer finds it ironic that as the president prepares to release Fannie and Freddie to the private sector, he is first trying to leverage their balance sheets to score political victories.
“The market will see the administration as panicking,” he said.
