Mortgage Rates PLUMMET – What This Means For Home Prices!
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Trump announced plans to inject hundreds of billions of dollars into the housing market to lower monthly home prices. Historically, such moves flip the market into overdrive or make housing more expensive, fueling rumors of another bubble. Graham is selling off all his real estate this year, listing another in a few months, aiming to have all but one property by year-end, due to the 'great housing reset' per Redfin. Discussion covers 2026 market, Trump's plan impact, and effects with falling mortgage rates.
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On January 8th, Trump tweeted he'd drive down mortgage rates by purchasing $200 billion in mortgage-backed securities (MBS). Banks bundle mortgages into MBS sold to insurance companies, pensions, hedge funds, institutional investors at market rates. $200 billion purchase pushes MBS prices higher, lowering yields and thus mortgage rates. Analysts predict 0.25 to 0.5 percentage point drop, boosting purchasing power by up to 6%. 30-year mortgage rate dropped to 5.99%, matching February 2023 low. In short supply market, benefits go to sellers; cheaper financing lets buyers pay more for same homes.
2005-2007 bubble: builders overbuilt, no-money-down mortgages flooded market, collapse followed. Post-bubble, construction never returned to pre-2006 levels. 2020 pandemic worsened: low rates led to refinancing, then rate hikes locked people in (payments up 50% if moving). Combined with low building, keeps prices high. Now seeing 2019 inventory levels; may soon enter buyer market. By end of 2025, sellers outnumbered buyers by 530,000, widest gap since 2013.
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