Rates Lower as FHFA Expands MBS Purchase Limits

What Is Happening Today

Markets are starting the week on firmer footing, with both stocks and mortgage bonds trading higher this morning. The biggest driver early today is a policy shift from the Federal Housing Finance Agency, which expanded how much mortgage-backed securities Fannie Mae and Freddie Mac can hold. That move signals continued support for the housing market and adds stability to mortgage rates as investors look ahead to this week’s Fed meeting and a busy economic calendar.

At the same time, strong Durable Goods data suggests economic momentum remains intact, while speculation around the next Fed Chair is quietly influencing market sentiment ahead of Wednesday’s rate decision.

FHFA Expands Mortgage Market Support

FHFA raised the cap on MBS holdings for Fannie Mae and Freddie Mac
Limits increased from $40 billion each to a combined $450 billion
Change follows President Trump’s directive to purchase $200 billion in MBS
Move opens the door for additional bond buying if needed

This policy shift reinforces government support for housing and provides a constructive backdrop for mortgage rates heading into the Fed meeting.

Housing Policy and Leverage Debate

Administration continues to float ideas to improve housing affordability
Proposal includes allowing retirement funds to be used for down payments
Home prices have risen mid-single digits annually, outpacing many retirement returns
Housing leverage can amplify gains despite slower price appreciation

The discussion highlights how housing remains central to affordability policy and long-term wealth building, especially as price growth continues to outpace incomes.

Fed Chair Speculation Gains Attention

Trump praised Rick Rieder as a potential Fed Chair candidate
Prediction markets now show Rieder at 50% odds
Kevin Warsh sits near 27%
Announcement could come before the Fed statement this week

Leadership uncertainty adds another layer of market sensitivity just days before Powell’s press conference.

Durable Goods Show Economic Strength

Headline Durable Goods rose 5.3% vs 4% expected
Core Durable Goods increased 0.7% vs 0.3% expected
Prior month revised slightly lower by 0.2%
Core shipments rose 0.4%, supporting future GDP revisions

The data points to steady business investment and reinforces that growth remains resilient despite higher rates.

Key Data Ahead This Week

Tuesday: ADP Employment, Case-Shiller, FHFA home prices
Wednesday: Mortgage applications, Fed decision and press conference
Thursday: Jobless claims, productivity, labor costs
Friday: Producer Price Index

With the Fed meeting midweek, volatility is likely to increase as markets react to policy guidance.

Final Takeaway

Mortgage bonds and stocks opened the week on a positive note as the FHFA expanded support for the mortgage market and Durable Goods data surprised to the upside. The increased capacity for MBS purchases provides an important stabilizing force for rates, especially with the Fed meeting approaching.

While leadership speculation at the Fed and a heavy data calendar could create short-term volatility, today’s backdrop is constructive for housing and mortgage rates. If economic data remains contained and the Fed maintains a balanced tone, rates may continue to hold near recent lows as the week unfolds.