Mortgage Rates Slip Below 6 Percent for First Time Since August 2022.

The current administration has proposed a range of ideas to help young families achieve homeownership, including bringing down mortgage rates, and banning large institutional investors from buying residential homes.

Here's how the president's latest idea surrounding mortgage bonds would work.

A mortgage-backed security (MBS) is a bond comprised of home loans. Thousands of individual mortgages are pooled into a single investment, and the homeowners' monthly payments are passed through to the investors who hold it.

Investors are attracted to mortgage-backed securities because they yield higher income than government bonds, and agency investment vehicles carry less credit risk than corporate bonds.

In a Jan. 8 Truth Social post, the president directed the purchase of $200 billion in mortgage bonds to restore housing affordability.

This would be a drop in the bucket compared to the wider market, though. U.S. mortgage bonds are valued at approximately $11 trillion, accounting for the majority of the global market.

Trump's proposal has already led to results in the mortgage market.

As of Jan. 9, the average 30-year fixed-rate mortgage reached 5.99 percent, down 22 basis points from the previous day, according to the Mortgage News Daily Index. This marked the lowest level since August 2022.