With the Fed widely expected to reduce the federal funds rate next week, demand for agency MBS is rising. Banks are also projected to add to their holdings, though their buying might be somewhat delayed.
There’s speculation that the Trump administration will direct the GSEs to increase purchases of agency MBS, potentially as part of a declaration of a housing emergency. The move could help reduce mortgage rates.
Federal Reserve Governor Lisa Cook, in a lawsuit challenging her termination by Trump, argued that the president’s action would shatter the independence provided to the Fed.
Fannie Mae economists slightly increased their mortgage rate projections for the remainder of the year despite widespread expectations that the Federal Reserve will cut the federal funds rate in September.
Mortgage rates aren’t expected to move down much even if the Fed cuts interest rates next month; GSE economists slash projections for home price appreciation; ICE integrates origination and servicing platforms to originate home equity loans; majority of homeowners feeling financially stressed.
Executives at mortgage companies anticipate originations will pick up as soon as interest rates on mortgages decline. However, the MBA’s projections suggest little movement in rates for the rest of this year.
NAR Economist Lawrence Yun is projecting 14% growth in home sales in 2026 if the interest rate on mortgages falls to 6%. However, economists at Fannie Mae and MBA in recent weeks lowered their expectations for mortgage rates decreases.
Bill to limit trigger leads passes in House; Fannie economists see higher interest rates; home prices decline in April; HUD on the move; FHFA directs GSEs to propose using cryptocurrency in calculations for mortgage applicant’s reserves.