U.S. mortgage rates dropped below the 6% threshold Friday for the first time in nearly three years, the day after a presidential directive for Fannie Mae and Freddie Mac to purchase a multibillion-dollar tranche of mortgage-backed securities (MBS).
The 30-year fixed-rate mortgage fell to 5.99% on Friday morning, down from 6.21% the previous day, according to the Mortgage News Daily Rate Index, which tracks changes in lender rate sheets.
This decline, following President Donald Trump’s announcement Thursday that he had directed government-sponsored enterprises (GSEs) Fannie and Freddie to purchase $200 billion of MBS, could alter the affordability landscape for homebuyers as the new year unfolds.
While the immediate drop was sharp, industry participants suggest that some of this movement was anticipated.
“Mortgage rates have already tightened by about 35 [basis points] over the past two to three months, since the GSEs ramped up purchase activity to $15B per month in October/November 2025,” said Victor Kuznetsov, managing director and co-founder of Imperial Asset Management, in commentary provided to Scotsman Guide. “This slightly increased affordability for borrowers as intended.”
Kuznetsov noted that following the announcement, MBS spreads tightened significantly before retracing slightly. He cautioned, however, that the long-term impact depends heavily on execution.
“Investment bank researchers tend to agree that most of these MBS purchases have already been priced into rates, so the timing of the GSEs’ MBS purchases will be important,” Kuznetsov said. “Will the GSEs purchase $200 billion over 2026’s calendar year, spreading out the tightening effects over a full year? Details on deployment timing have been sparse so far.”
Despite questions regarding timing, the drop in borrowing costs has delivered a substantial, immediate boost to purchasing power. An analysis by real estate listings platform Redfin indicates that a homebuyer with a $3,000 monthly budget can now afford a home priced at roughly $479,750 — a gain of approximately $14,000 in purchasing power compared to just one month ago.
Michelle Parkinson, senior vice president of capital markets at AD Mortgage, views the move as a short-term window for affordability.
“In the short term, the increased demand lowers rates, which will help homebuyers afford the high home prices,” Parkinson said in a statement provided to Scotsman Guide. “Long term, if this is a one-time purchase, rates will adjust back to normal ranges depending on the economic landscape at that time. The administration instructing Fannie and Freddie to buy mortgage bonds is just one initiative in the quest to lower mortgage bonds for a substantial period of time.”
For the moment, market dynamics appear to favor buyers. Redfin’s data, which draws on a range of sources, including recurring weekly data from Mortgage News Daily, shows there are currently hundreds of thousands more homes available for sale than there are prospective buyers.
However, Redfin economists caution this window might be brief, echoing the perspective of other market actors.
“Serious buyers may want to jump in before competition heats up in the spring,” said Chen Zhao, Redfin’s head of economic research, in the analysis released Friday.
In his commentary to Scotsman Guide, Kuznetsov added that while bond purchases lower the risk premium for investors, they are not the sole driver of rates moving forward.
“Inflation, geopolitical events and the Federal Reserve’s monetary policy will continue to affect mortgage rates in 2026,” Kuznetsov said.
