In response to widening yield spreads, increased purchases of mortgage-backed securities (MBS) by Fannie Mae and Freddie Mac may help alleviate pressure from rising mortgage loan spreads. According to informed sources, Fannie Mae and Freddie Mac have initiated large-scale acquisitions of MBS to stabilize a market unsettled by spread expansion and heightened volatility. This move follows an executive directive issued by U.S. President Donald Trump two months ago, instructing the two government-sponsored enterprises to purchase $200 billion in MBS as part of a broader policy to support housing affordability and influence the mortgage market.

The renewed market activity suggests these federally controlled entities may be taking advantage of recent market sell-offs to progressively rebuild their bond portfolios. Recently, macro pressures—including intensified interest rate volatility, U.S.-Iran tensions, and oil price fluctuations—have significantly widened mortgage spreads, pushing mortgage rates to a three-month high. Against the backdrop of rising Treasury yields, borrower stress has increased. While Fannie Mae and Freddie Mac’s amplified purchasing could partly offset spread-widening pressures, it may only partially counter the macroeconomic factors driving higher financing costs.

Since entering federal conservatorship in 2008, Fannie Mae and Freddie Mac have undergone years of balance sheet reduction but remain among the largest holders of U.S. mortgage debt. Data indicate that the combined holdings of the two entities once approached $1.5 trillion, declining to $158 billion by the end of 2022 before rebounding to $278 billion as of January 2026. Initial purchases following the directive were relatively modest, possibly due to narrower spreads at the time; recent risk premium expansion, however, may offer a more favorable environment for a new round of acquisitions.