U.S. mortgage rates fell below 6% for the first time in years, giving homebuyers increased affordability. The average 30-year fixed mortgage rate dropped to 5.99% Friday morning, down from 6.21% the previous day, marking the lowest level since February 2023. Over the past year, rates have declined by more than a full percentage point.

Rates for 15-year fixed mortgages also decreased, hitting 5.55%. Mortgage rates usually move slowly, rising or falling in tiny increments, so this sharp drop is highly unusual and immediately grabbed attention in financial markets.

The decline followed President Trump’s announcement on Truth Social, stating he instructed representatives to buy $200 billion in mortgage bonds. “This will drive mortgage rates down, monthly payments down, and make owning a home more affordable,” he said.

Federal Housing Finance Authority chief Bill Pulte confirmed that Fannie Mae and Freddie Mac would handle the purchases. “We put in a $3 billion buy already,” he said Friday at the White House, showing immediate action on the directive.

Fannie Mae and Freddie Mac already hold over $230 billion in mortgage securities. An additional $200 billion purchase would nearly double their bond holdings, increasing liquidity in the mortgage market. Lenders receiving cash from bond sales can lend more to homebuyers, which tends to push mortgage rates lower.

This move is part of the administration’s broader push to improve affordability amid rising housing costs. Other measures include easing tariffs and adjusting fuel-efficiency rules to reduce household expenses. Analysts note that lower mortgage rates could stimulate new construction and increase home turnover.

However, experts caution the impact may be limited. Existing homeowners often have mortgages at 4.4% on average, far below the new rates, so fewer are likely to sell. UBS analysts estimate the bond buying may reduce 30-year rates by about 0.2%, a modest but meaningful shift for buyers entering the market.

JPMorgan Chase analysts emphasize that the $200 billion purchase represents only 1.4% of the $14.5 trillion mortgage market. “This initiative will likely have limited influence on overall housing trends,” they wrote, suggesting that long-term market dynamics will continue to be shaped by supply, demand, and affordability pressures.