Mortgage Rates Dropped After GSE Bond Purchases

Borrowers saw mortgage rates fall to 5.95% as Fannie Mae and Freddie Mac began a $200 billion bond-buying program.

Updated on Sept. 18, 2026 in Residential

Bold vector editorial illustration showing a residential door handle with a key in the lock, symbolizing consumer access to home financing. — Mortgage rates declined to 5.95% this month following the launch of a $200 billion bond-buying initiative by Fannie Mae and Freddie Mac. AI Illustration. Upload story photo >

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In January 2026, Fannie Mae and Freddie Mac initiated a federal mortgage-backed securities purchasing program designed to lower borrowing costs for homeowners. This effort followed a directive from the President of the United States issued on January 8, 2026.

Why it matters

The program aims to offset the impact of the Federal Reserve allowing approximately $15 billion in bonds to roll off its balance sheet each month. By increasing demand for these securities, officials intend to stabilize the housing market and reduce mortgage interest expenses for households.

Following the initiative, mortgage rates declined to 5.95 percent, down from peaks of nearly 8 percent in 2024. The total purchase target for the government-sponsored enterprises is set at $200 billion.

The players

Fannie Mae

A government-sponsored enterprise that provides liquidity to the mortgage market by purchasing home loans and securitizing them into mortgage-backed securities.

Freddie Mac

A government-sponsored enterprise that supports the housing market by buying mortgages from lenders and packaging them for investors.

Federal Housing Finance Agency

The federal regulator that oversees Fannie Mae and Freddie Mac and determines their mortgage-backed securities holding limits.

President of the United States

The head of the executive branch who set the policy directive for the mortgage-backed securities purchase program.

Federal Reserve

The central bank of the United States, which manages monetary policy and maintains a massive balance sheet of mortgage-backed securities.

The details

Fannie Mae and Freddie Mac utilize existing liquidity to purchase mortgage-backed securities, effectively stepping into the market as the Federal Reserve reduces its own holdings. This increase in institutional demand is projected to shave 10 to 25 basis points off 30-year mortgage rates. By holding these bonds, the entities aim to tighten the spread between mortgage rates and other benchmarks to ease costs for prospective buyers.

2022: GSE portfolios reached $158 billion.
2024: Mortgage rates reached nearly 8 percent.
January 8, 2026: The President of the United States directed the purchase program, with an initial $3 billion in bonds bought.
January 31, 2026: GSEs added a total of $12.5 billion in mortgage-backed securities to their portfolios.

Money Landscape

This program marks a shift in housing finance policy as the government-sponsored enterprises move to offset the effects of the Federal Reserve's ongoing bond runoff. It sits in contrast to the high-rate environment of 2024, representing an active effort to lower borrowing costs nationally.

The potential reduction of up to 25 basis points could lower interest costs for individuals considering new 30-year mortgages. Because market conditions shift frequently, you should discuss how these interest rate trends affect your specific refinancing or purchasing goals with a qualified financial professional.

The takeaway

The government’s intervention aims to reduce the interest rate burden on households by bolstering demand for mortgage bonds. If you are tracking mortgage costs, review your lender's current rate offers regularly to see how national market shifts influence your specific borrowing capacity.