President Donald Trump is launching a major intervention in the American housing market, aiming to tackle one of the biggest affordability crises facing US households. His strategy centres on pushing down stubbornly high mortgage rates, but its ultimate success may depend on a single, crucial decision: who he picks to lead the Federal Reserve.
The $200 Billion Mortgage Bond Gambit
In a significant move, the Trump administration has directed government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities (MBS). Bill Pulte, head of the Federal Housing Finance Agency (FHFA), confirmed the authorisation, calling it the largest mortgage bond purchase in the history of the two companies. The goal is clear: to increase liquidity and reduce the spread between MBS and Treasury yields, thereby lowering interest rates for home buyers.
Analysts at UBS estimate this intervention could pull the average 30-year fixed mortgage rate down to around 6.0% from the current level of approximately 6.21%. TD Cowen's Gennadiy Goldberg offered an even more optimistic projection, suggesting rapid execution could see rates fall to about 5% by year-end, a substantial drop from earlier forecasts. The market reacted swiftly, with shares of companies like Opendoor Technologies and Rocket Cos. rising in premarket trading on Friday.
Why the Federal Reserve Chair Pick is Critical
While the bond purchase is a powerful tool, long-term mortgage rate trends are inextricably linked to the monetary policy set by the US central bank. President Trump has openly criticised current Fed Chair Jerome Powell for not cutting interest rates quickly enough, blaming him for a sluggish property market. With Powell's term ending in May 2026, Trump's nominee will be his most significant economic appointment.
Treasury Secretary Scott Bessent indicated an announcement could come later this month, though Trump claims he has already decided. Whoever gets the nod is expected to align closely with the President's desire for lower rates to stimulate the housing sector. This comes against a backdrop where national home prices have soared over 50% since 2019, and mortgage rates have more than doubled from their 2021 lows.
Other Major Market Developments
The news on housing was part of a busy period in global markets. In the mining sector, giants Glencore and Rio Tinto confirmed they are in early-stage talks about a potential mega-merger. A combination could see Rio Tinto, valued at around $140 billion, acquire Glencore ($65 billion market cap) in a court-sanctioned deal. The talks, which had previously broken down over a year ago, have been revived with a deadline for a firm offer set for February 5, 2026.
In the automotive industry, General Motors (GM) announced another massive financial charge related to its electric vehicle (EV) business, totalling $6 billion. This includes $1.8 billion in noncash charges and follows a $1.6 billion charge in the third quarter of 2025. The move reflects slowing EV demand post-tax incentives and relaxed emissions rules. Rival Ford Motor had announced $19.5 billion in similar charges in December 2025.
In a setback for New York City's new mayor, Zohran Mamdani, a US Bankruptcy Court denied his request to delay the auction of roughly 5,500 rent-regulated apartments owned by the bankrupt Pinnacle Group. The auction proceeded, with Summit Properties USA offering up to $451 million for the portfolio.
Finally, a surge in US worker productivity—4.9% in Q3 2025—was reported, but economists cautioned it was due to calculation methodology rather than an AI-driven efficiency boom. Year-over-year growth remained a more modest 1.9%.
For Indian investors and policymakers, these developments highlight the interconnectedness of global markets, where US monetary policy and housing interventions can have ripple effects worldwide, influencing commodity demand, investment flows, and economic sentiment.
