For the first time in over a year, the benchmark 30-year fixed mortgage rate has dipped below the psychologically significant 6% threshold, falling to 5.99% on Friday—a drop of 22 basis points in a single day. The catalyst: President Donald Trump's announcement that he is directing mortgage giants Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds as part of an aggressive push to lower housing costs for American families.

A Bold Government Intervention

The executive action, announced via social media on Thursday, represents one of the most aggressive federal interventions in the mortgage market since the 2008 financial crisis. By ordering the government-sponsored enterprises to purchase a massive tranche of mortgage-backed securities, the Trump administration is effectively flooding the market with liquidity, which pushes down yields on these bonds and, consequently, the interest rates that lenders charge borrowers.

"This is a significant move that will immediately benefit millions of Americans looking to buy or refinance their homes," said Mark Zandi, chief economist at Moody's Analytics. "The direct intervention in the MBS market is a tool the government has used sparingly, but when deployed at this scale, it can have immediate effects on rates."

What It Means for Homebuyers

The rate reduction is welcome news for a housing market that has been frozen by affordability constraints. At a 6.5% mortgage rate, a $400,000 home purchase would carry a monthly principal and interest payment of approximately $2,528. At 5.99%, that same payment drops to $2,395—a savings of $133 per month, or nearly $48,000 over the life of a 30-year loan.

But the impact extends beyond just monthly payments. Lower rates also boost purchasing power. A buyer who could afford a $400,000 home at 6.5% rates can now afford roughly $422,000 at 5.99%, potentially opening up more inventory options in a market where supply remains constrained.

Who Benefits Most

  • First-time homebuyers: Those who have been priced out of the market may find new opportunities as affordability improves
  • Refinancers: Homeowners with rates above 6.5% now have a window to lower their monthly payments
  • Move-up buyers: Families looking to upgrade homes may find the math works better than it has in two years

The Bigger Picture on Housing Affordability

This rate drop is part of a two-pronged approach the Trump administration has taken this week to address the housing affordability crisis. Earlier, the president also proposed banning institutional investors from purchasing single-family homes, targeting the private equity firms and Wall Street buyers who have been accused of driving up prices and reducing inventory for individual families.

Together, these measures represent the most aggressive housing policy agenda from any administration in decades. Whether they will be sufficient to meaningfully address a crisis years in the making remains to be seen.

"We're seeing the first real policy response to what has been a generational affordability crisis. The combination of lower rates and reduced competition from institutional buyers could genuinely shift the market toward families over the coming year."

— Danielle Hale, Chief Economist, Realtor.com

Will Rates Stay This Low?

The sustainability of sub-6% mortgage rates depends on several factors. The Federal Reserve's stance on interest rates remains crucial—and with January rate cut odds now at just 5% following Friday's jobs report, the Fed isn't likely to provide additional tailwinds in the near term.

More importantly, the mortgage market will need to digest the $200 billion in government purchases. While the immediate effect has been dramatic, some economists caution that the impact could moderate over time as the market adjusts to the new supply dynamics.

Fannie Mae's latest forecast projects rates could settle around 5.9% by the end of 2026's fourth quarter, suggesting these lower levels may have some staying power. However, the National Association of Realtors is more conservative, expecting rates to hold closer to 6.4% for the year.

What Homebuyers Should Do Now

For those considering a home purchase or refinance, the current environment presents a genuine opportunity—but one that requires careful consideration:

  • Get pre-approved: Rates can move quickly, and having a pre-approval locks in your rate and purchasing power
  • Calculate your true savings: If refinancing, factor in closing costs to determine if the rate drop justifies the expense
  • Don't panic-buy: Lower rates improve affordability, but buying a home remains a major financial decision that should align with your long-term plans
  • Watch the market: If rates continue to fall, waiting could save additional money—but timing the bottom is notoriously difficult

The Bottom Line

After years of watching mortgage rates climb from pandemic-era lows near 3% to peaks above 7%, American homebuyers are finally getting some relief. The Trump administration's aggressive intervention in the mortgage bond market has delivered an immediate, tangible benefit: sub-6% rates that meaningfully improve affordability for millions of families.

Whether this marks the beginning of a sustained period of lower rates or a temporary dip remains uncertain. But for buyers who have been waiting on the sidelines, the window to act has opened wider than it has in over a year. The question now is whether they're ready to walk through it.