Can the Trump Administration Help Lower Mortgage Rates to Improve Housing Affordability?
December 4, 2025
After focusing its efforts on trade negotiations in the first half of 2025, the Trump Administration has recently increased its attention on the issue of affordable housing in the U.S. The Administration floated the idea in September that it could invoke the 1976 National Emergencies Act to combat a housing market that remains unaffordable for many Americans.1 In October, Federal Housing Finance Agency (FHFA) Director Bill Pulte announced that his agency is reviewing the loan-level price adjustments (LLPAs)—additional risk-based fees charged on conventional mortgages—with the intention of lowering borrowing costs for prospective homebuyers.2 This past month, Pulte added that officials are now evaluating how to make existing mortgages portable (i.e. the borrower can transfer the existing unpaid balance and interest rate on their current mortgage to purchase a new property), and whether to introduce a 50-year mortgage product.3
Although these recent announcements are a step in the right direction, their impact on improving housing affordability more broadly is questionable. Supply-side constraints on housing—such as building and zoning codes—are more effectively addressed at the state and local levels. On the demand side, while reducing LLPAs and introducing a 50-year mortgage product could reduce monthly mortgage payments for some borrowers, these changes would be less capital efficient for Fannie Mae and Freddie Mac and work against the Administration’s goal of privatizing the two government-sponsored enterprises. Portable mortgages would be most beneficial to existing homeowners who have already locked in low borrowing costs.
Today’s Chart of the Week compares the average 30-year mortgage rate with the 10-year Treasury yield. Lowering Treasury yields and reducing the spread between mortgage rates and longer-term Treasury yields would accomplish the Administration’s objective of improving housing affordability more broadly. However, longer-term Treasury yields face resistance to falling below 4% with inflation continuing to come in at 3%. Additionally, the spread between mortgage rates and Treasury yields has remained wide over the past several years with the Federal Reserve (Fed) passively reducing its mortgage-backed securities portfolio.
Key Takeaway
The Administration’s attempts to exert influence over the Fed—perhaps most effectively with the upcoming selection of its new chairman—have increased the probability that future monetary policy will be focused on driving Treasury and mortgage rates lower. More extraordinary policies such as quantitative easing and yield curve control cannot be ruled out as future policy tools attempting to achieve the Administration’s objectives.
Sources:
1Realtor.com – How a National Housing Emergency Could Open More Doors for First-Time Buyers; 9/10/25
2Housingwire – Pulte says LLPA fees under review, signals relief for borrowers; 10/23/25
3CNN – The Trump administration is ‘actively evaluating’ portable mortgages. What you need to know; 11/13/25
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