## The Mortgage Market Responds to Mass Bond Purchases — What Changes for Borrowers?

Following Monday’s announcement of a program to purchase $200 billion worth of mortgage-backed bonds, there was a spectacular drop in **mortgage interest rates**. For the first time in several years, the rate for a 30-year mortgage fell below 6%, while the interest rate for a 15-year product decreased to 5.55%. A shift of this magnitude in just a few days is unusual — typically, the market changes rates very gradually, with daily fluctuations of only fractions of a percent.

### How the New Program Works

The program, which will be implemented by Fannie Mae and Freddie Mac, has already taken flight. According to Bill Pulte, head of the Federal Housing Finance Authority, the first transactions were initiated immediately, and bonds worth $3 billion have already been raised. These two institutions currently hold a portfolio exceeding $230 billion — an additional $200 billion would nearly double their holdings.

The system’s logic is simple: when **mortgage bonds** enter institutional portfolios, lenders gain fresh capital. Increased cash liquidity combined with unwavering demand naturally forces the market to lower interest rates for new borrowers.

### Optimism of Analysts — and Reservations

UBS experts estimate that this move could reduce **interest rates** for 30-year products by over 0.2 percentage points. The potential effect? Stimulating both demand for new construction investments and rotation in the secondary housing market.

However, not everyone is convinced. JPMorgan Chase and other analysts point to a fundamental limitation: the current portfolio of 4.4% mortgage loans creates a lock-in effect. Homeowners with cheap loans have little incentive to refinance or sell, which reduces overall market dynamism. In scale terms — $200 billion is just 1.4% of the estimated $14.5 trillion total U.S. mortgage market.

### Broader Context of Economic Policy

The bond purchase initiative fits into a broader strategy of reducing living costs for ordinary Americans. Simultaneously, reductions in tariffs and changes in fuel efficiency standards serve the same purpose — easing the burden on consumers facing inflationary pressures and rising expenses.