If you’ve been doom-scrolling Zillow lately, you know the vibe. It’s rough out there. For the last couple of years, the "American Dream" of homeownership has felt more like a math problem that nobody can solve. But things are moving fast in 2026. Since the second Trump administration took the wheel, the conversation has shifted from "if" rates will drop to "how fast" the government can force them down.
Honestly, it’s a lot to keep track of. One day there’s a post on Truth Social, the next day the Federal Reserve is getting subpoenas. If you're wondering will trump lower mortgage interest rates, the short answer is that he’s already trying—and the market is reacting. As of January 17, 2026, we’re seeing some of the lowest numbers in years, but there’s a massive "but" attached to all of it.
The $200 Billion "Bazooka" and 5% Rates
Earlier this month, the White House dropped a metaphorical bomb on the housing market. President Trump directed Fannie Mae and Freddie Mac—the giants that back most U.S. home loans—to buy up $200 billion in mortgage-backed securities (MBS).
Why does this matter to you?
Basically, when the government buys these bonds, it creates massive demand. When demand for those bonds goes up, the interest rates attached to them usually go down. It’s a direct lever. Trump claimed on social media that this move alone helped push mortgage rates down to 5.7%.
While the national average is currently hovering closer to 6.11% for a 30-year fixed mortgage according to Bankrate, that’s a huge win compared to the 8% peaks we saw not too long ago.
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Why the sudden drop?
- Artificial Demand: By forcing Fannie and Freddie to use their "cash hoards" (as the President calls them), the administration is bypassing the traditional slow-burn of the Federal Reserve.
- The Spread: Usually, mortgage rates stay about 2% higher than the 10-year Treasury yield. Trump’s move is designed to "compress the spread," meaning mortgage rates fall even if other interest rates stay steady.
- Market Sentiment: Investors are betting that Trump will get his way. They’re pricing in lower rates now because they expect more aggressive moves later this year.
The War With the Fed: It's Getting Personal
You can't talk about will trump lower mortgage interest rates without talking about the drama at the Federal Reserve. It’s a total mess.
Jerome Powell, the Fed Chair, has been the main target of the President’s frustration. Trump has called him everything from a "stubborn mule" to a "stiff." The tension hit a breaking point this week when Powell revealed the Fed is facing grand jury subpoenas from the Justice Department. The administration says it’s about "renovation cost overruns" at the Fed’s headquarters, but Powell is calling it a "pretext" to bully him into cutting rates.
Trump wants rates at 1%. Most economists think that’s a recipe for an inflation explosion.
The reality is that while the President can’t officially "fire" the Fed chair without a very specific legal reason, Powell’s term ends in May 2026. Trump is already vetting replacements—like Fed Governor Chris Waller or Kevin Hassett—who might be way more willing to slash rates. If he installs a "loyalist" at the Fed, we could see the most aggressive rate cuts in modern history.
What Most People Get Wrong About Rates
Everyone thinks lower rates are an automatic win. It’s not that simple.
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There’s this thing called the "lock-in effect." Right now, about 20% of people with mortgages are sitting on rates below 3%. They aren't moving. If rates drop to 5.5% or 5.7%, those people still won't move. Why would they trade a 3% loan for a 5.5% loan?
This keeps inventory low. And when inventory is low, prices stay high.
So, even if Trump succeeds in lowering interest rates, you might find yourself in a bidding war that wipes out your monthly savings. It’s a catch-22. To counter this, the administration is floating ideas for "portable mortgages"—letting you take your old 3% rate with you to a new house. It sounds great on paper, but banks hate the idea because it’s risky for them.
The Hidden Risks: Tariffs and Inflation
Here is the part nobody likes to talk about. Tariffs.
Trump’s trade policy involves heavy taxes on imports. While that's meant to protect American jobs, it often makes things like lumber, steel, and appliances more expensive. If the cost to build a house goes up, the price of the house goes up.
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Economists like Jeffrey Frankel from Harvard have warned that the inflationary pressure from these tariffs might actually force the Fed to keep rates higher for longer to stop the economy from overheating. It’s a tug-of-war. On one side, you have the $200 billion bond-buying plan trying to pull rates down. On the other, you have trade policies that could push them back up.
Real-World Affordability Check
| Loan Type | Current Average (Jan 2026) | 1-Year Ago |
|---|---|---|
| 30-Year Fixed | 6.11% | 7.04% |
| 15-Year Fixed | 5.38% | 6.27% |
| 30-Year FHA | 5.78% | 6.85% |
Actionable Steps for 2026 Homebuyers
Stop waiting for 3% rates. They aren't coming back. The "new normal" is likely going to settle somewhere in the 5% range if the administration's plans hold steady.
- Watch the "Spread": Keep an eye on the 10-year Treasury yield. If it stays around 4% and mortgage rates are at 6%, there’s still room for them to fall. If they are already close to 5.5%, that might be the floor.
- Get a "Free Refinance" Clause: Some lenders are offering "buy now, refinance later" deals where they waive the closing costs on a future refinance if rates drop within two years. Ask for this specifically.
- Look for New Construction: Because the administration is pressuring builders to increase supply, many developers are offering their own "rate buy-downs" (sometimes as low as 4.99%) just to move inventory.
- Check the "Institutional Ban": Trump is trying to ban big corporations from buying single-family homes. If this goes through, it could mean less competition from "all-cash" Wall Street buyers in your neighborhood.
The bottom line? The President is using every tool in the shed—executive orders, social media pressure, and bond purchases—to force mortgage rates down. It’s working for now, with rates hitting a three-year low this week. But with a Fed leadership change coming in May and the looming impact of tariffs, the window to catch these "Trump rates" might be narrower than you think.
Don't wait for a perfect market. It doesn't exist. Focus on the monthly payment you can actually afford today, and treat any future rate drops as a lucky bonus.