President Trump orders the purchase of mortgage bonds. These stocks are soaring

Shares of mortgage companies soared Friday after President Donald Trump directed “lawmakers” to buy mortgage bonds to lower interest rates for homebuyers.

President Trump said in a social media post Thursday that he is asking unnamed buyers (it’s not clear whether he means the Treasury Department, Fannie Mae, Freddie Mac or other government agencies) to buy $200 billion in mortgage bonds. Trump said this should lower interest rates and monthly payments, making homeownership more affordable.

Federal Housing Finance Agency Commissioner Bill Pulte later posted, “We’re working on it.” President Trump said Fannie & Freddie, a government-backed organization that buys mortgages from banks, credit unions and other original lenders, is making this move because it is sitting on a lot of cash.

mortgage lender rocket company It rose more than 9%, setting a new intraday high in 2021. UWM Holdings It rose more than 13% on its best day since 2023. penny mac It rose more than 6%.

Financier focused on artificial intelligence better homes and finance Added more than 6%. open door technologies The real estate e-commerce platform that became a meme stock soared more than 13%.

white house pressure

Wall Street has long expected the Trump administration to do something to put downward pressure on mortgage rates. But analysts are now wondering what the real impact will be on consumers and what it means for stock lending.

“I read that the President has ordered FHFA Secretary Bill Pruitt to force Fannie Mae and Freddie Mac to buy $200 billion worth of MBS to lower interest rates,” TD Cowen’s Jarrett Seiburg said in a letter to clients, referring to mortgage-backed securities. “This is not surprising.”

TD Cowen expects: 10 years US Treasury The yield through the end of 2026 is 3.5%, down from about 4.17% on Friday. That would put downward pressure on 30-year fixed mortgage rates, potentially cutting them from the current 6.2% to around 5.25%. 30-year mortgage rates fell to their lowest level in nearly three years on Friday, according to Mortgage News Daily.

TD Cowen said if the $200 billion in purchases materialize quickly, mortgage rates could end the year near 5%.

smaller than expected

But Wolf Research analyst Tobin Marcus said the $200 billion acquisition plan is smaller than the company had previously anticipated. The impact on the housing market is likely to be “positive but quite modest”, he said.

Bank of America analyst Leif Jadrosic said the lower mortgage rates provide some relief to homebuyers struggling with high interest rates. He calculated that for every quarter-point drop in mortgage rates, monthly payments on a $400,000, 30-year fixed loan could be reduced by up to $70.

Morgan Stanley analyst Jeffrey Adelson now sees UWM and Rocket’s performance moving closer to his bull market as mortgage rates decline. Barclays analyst Terry Ma said PennyMac and UWM offer the best risk and reward for investors in the sector, highlighting Rocket’s relatively high multiple as a hindrance.

“To the extent these efforts stimulate refinance and purchase origination activity in a meaningful way, volume leveraged stocks are clear beneficiaries from an earnings perspective,” Ma wrote to clients.

Impact of IPO

Analysts also question whether Mr. Trump’s plan could disrupt potential initial public offerings for Freddie Mac and Fannie Mae. Pruitt told CNBC on Thursday that President Trump could make a decision on the IPO (Government Sponsored Enterprises, which are also in conservatorship with the GSEs and are under federal control) within the next month or two.

“We always thought the path to a deal would be slower and trickier than some investors expected in the post-election euphoria last year,” Wolf’s Marcus said.

Marcus said mortgage purchases are “the biggest and most obvious demand-side tool in the (White House’s) housing toolkit.” “While the initial market response has not been overwhelming, it appears to us that the White House does not have a silver bullet for housing or ‘affordability’ issues more generally.”