President Donald Trump’s proposal to purchase $200 billion in mortgage-backed securities is drawing sharp criticism from economists, with warnings that the plan could worsen housing affordability in the long run despite temporarily lowering mortgage rates.
‘People’s QE’ Mortgage Stimulus
According to economist Mohamed El-Erian, by tapping funds held by government‑sponsored enterprises Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) under powers granted during their 2008 conservatorship, Trump is reviving long‑standing concerns over political intrusion into monetary policy.
“This should serve as a reminder of two things that markets haven’t yet fully internalized,” El-Erian said, first that political pressure on the Federal Reserve can extend beyond “lowering interest rates,” to include even “asset purchases,” which he likened to “People’s QE,” or the use of quantitative easing to fund public spending.
Second, that growing public anxiety over affordability issues and the political pressure resulting from the same will trigger more aggressive policy responses, he said in a post on X.
Even as we await details on the implementation of the just-announced $200 billion bond purchase program aimed at reducing mortgage rates to help home buyers (please see President Trump’s post below), this should serve as a reminder of two things that markets haven’t yet fully… pic.twitter.com/iizK6d380f
— Mohamed A. El-Erian (@elerianm) January 8, 2026
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