With mortgage rates back near 7%, a group representing community mortgage lenders says there may be another lever available to put downward pressure on borrowing costs: getting Freddie Mac to buy more mortgage-backed securities.
The Community Home Lenders of America (CHLA) is urging Federal Housing Finance Agency Director Bill Pulte and Treasury Secretary Scott Bessent to continue increasing mortgage-backed securities purchases by Fannie Mae and Freddie Mac, arguing that greater participation from Freddie could narrow mortgage spreads by another 10 to 12 basis points.
The letter comes just days after Pulte said the government-sponsored enterprises were stepping up their MBS buying again.
“We are beginning to buy even more, large quantities, as we speak,” Pulte wrote on X on Sept. 18.
Pulte did not specify the size, timing, or allocation of the additional purchases between Fannie and Freddie.
The significance isn't simply how many bonds the GSEs buy. Increased demand for agency MBS can support securities prices and compress the spread between mortgage rates and benchmark Treasury yields. All else equal, a narrower spread can translate into better pricing for borrowers.
But CHLA argues the two enterprises haven't participated equally.
Fannie Bought More. Freddie Mostly Held Steady.
In its letter to Pulte and Bessent, CHLA pointed to what it says has been a substantial difference between Fannie and Freddie's MBS purchasing since the beginning of the year.
The enterprises' own monthly disclosures support the broader point.
Fannie Mae ended 2025 with $71.5 billion of agency securities in its retained mortgage portfolio. Holdings climbed to $110.5 billion in April before declining to $99.7 billion at the end of July — still roughly $28.2 billion, or nearly 40%, above their year-end level.
Freddie Mac's agency securities holdings moved much less after an initial increase.
Freddie ended 2025 with $44.6 billion of agency securities and reached $55.6 billion in February. Its holdings subsequently remained in a relatively narrow range, ending July at approximately $54.7 billion.
CHLA believes closing some of that gap could matter for mortgage pricing.
“By getting Freddie Mac into the game, we could further reduce spreads by 10 to 12 basis points, a material improvement in today's mortgage markets,” the group wrote.
The 10-to-12-basis-point figure is CHLA's estimate, not a guaranteed reduction in consumer mortgage rates.
Mortgage rates don't move solely with MBS demand. Treasury yields, inflation expectations, prepayment risk, and broader investor demand can overwhelm changes in mortgage spreads — something the market has already demonstrated this year.
NMP reported in January that President Donald Trump's call for up to $200 billion of Fannie and Freddie MBS purchases initially boosted agency MBS prices, but that broader capital-market movements subsequently erased those gains.
Then in March, Fannie and Freddie were again actively buying mortgage bonds amid sharp Treasury and MBS volatility. The purchases could support MBS pricing, but could not fully offset the broader forces pushing yields higher.
In other words, additional Freddie buying could put downward pressure on the spread portion of mortgage rates without guaranteeing borrowers see an equivalent decline in their note rates.
GSE Holdings Had Actually Been Falling
There's another wrinkle behind Pulte's latest announcement.
After increasing substantially earlier this year, the GSEs' reported MBS holdings had been declining for three consecutive months before Pulte said additional buying was underway.
Fannie held roughly $110.5 billion in agency securities in April, compared with $99.7 billion at the end of July. Freddie's holdings moved from approximately $56.2 billion to $54.7 billion over the same period.
Combined MBS holdings at the two enterprises totaled approximately $155.4 billion at the end of July, down from about $167.6 billion in April.
Pulte's Sept. 18 statement therefore signals another acceleration in buying after several months in which the GSEs' reported MBS holdings were moving in the opposite direction.
The next monthly portfolio reports should provide a clearer indication of how much additional purchasing has actually occurred.
CHLA Wants Ginnie Mae MBS Added To The Mix
CHLA is also renewing a proposal that goes beyond increasing purchases of Fannie- and Freddie-backed securities: it wants the enterprises to purchase Ginnie Mae MBS.
Ginnie Mae guarantees securities backed by federally insured or guaranteed mortgages, including FHA, VA, and USDA loans.
CHLA argues that adding Ginnie securities to the GSE purchasing strategy could more directly benefit borrowers using government-backed financing, including first-time buyers, veterans, active-duty military personnel and rural borrowers.
The group estimates that even the market signal created by Fannie and Freddie purchasing Ginnie Mae MBS could reduce mortgage rates for those borrowers by roughly 20 basis points.
CHLA contends that Fannie and Freddie already have the authority to purchase Ginnie Mae securities and argues that doing so would provide another source of demand for securities backed by government mortgage programs.
The proposal would also represent a significant expansion of the current discussion. The administration's MBS initiative has so far centered on Fannie and Freddie increasing mortgage-bond holdings as a means of putting downward pressure on borrowing costs.
The 10-Basis-Point Question For Originators
For LOs, 10 or 12 basis points may sound modest compared with the much larger swings mortgage rates have experienced this year.
But in a competitive market, incremental improvements in MBS pricing can matter — particularly when borrowers are comparing lenders and small movements can affect whether a rate can be locked at a given price.
The harder question is whether additional Freddie purchases would actually deliver the magnitude of spread compression CHLA projects.
The experience earlier this year demonstrates both sides of the equation: additional GSE demand can support MBS prices, but the enterprises are only one buyer in a much larger market, and movements in Treasury yields can quickly overwhelm improvements in mortgage spreads.
The question now isn't simply whether Fannie and Freddie will buy more MBS. It's how much they buy, whether Freddie begins closing the purchasing gap with Fannie, and whether any resulting spread compression becomes large enough for originators to see it on borrower rate sheets.
