President Donald Trump's $200 billion mortgage bond purchase represents a new approach to making homeownership more affordable.The president has announced several proposals to lower mortgage rates without waiting for interest ra te cuts from the Federal Reserve.Among them -- directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds. Since his Jan. 8 announcement on Truth Social, mortgage rates have seen a small dip, but economists question whether rates will fall enough to significantly increase affordability. Trump further outlined his proposed policies during his recent address at the World Economic Forum in Davos, Switzerland.RELATED STORY | Trump to address housing costs, credit card rates at economic summit"Homeownership has always been a symbol of health and vigor," Trump said.The housing market has been in a slump since 2022, when high mortgage rates collided with years of skyrocketing home prices.Joel Berner, a senior economist with Realtor.com, said the direct manipulation of mortgage rates is a new approach."Directly manipulating mortgage rates is not really something they've done much of before. This is sort of new," Berner said.Berner explains that the goal of the purchase is to force interest rates down by increasing demand for mortgage-backed securities. The plan aims to reduce what's known as the mortgage "spread" the difference between the 10-year Treasury yield and the interest rate on a 30-year mortgage.Spreads widen during times of economic uncertainty, while a narrow spread creates more confidence in the market."What they are doing is increasing demand to squish that margin down and allow for mortgage rates to fall," Berner said.Mortgage rates are currently down, hovering just above 6%. However, Berner says it's hard to know for sure if the move will create a long-term impact."It really depends on how the market perceives the move. If they perceive it as Fannie and Freddie are going to become long-term holders of mortgage bonds, then it's entirely the case that mortgage rates might sustain lower. If they think it's a one-time pop, then it might just be a short-term dip in rates," Berner said.RELATED STORY | Federal Reserve keeps interest rates unchanged even as Trump continues to insist they be loweredTrump is also taking steps to ban large institutional investors from buying more single-family homes."Homes are built for people, not for corporations and America will not become a nation of renters, we're not gonna do that," Trump said in Davos.That proposal has also been met with some skepticism. Daryl Fairweather, chief economist at Redfin, questions its effectiveness."Even if you were to ban these really large investors, they would probably be replaced by smaller investors. It's not necessarily going to open up inventory for first-time homebuyers," Fairweather said.Economists warn that the mortgage bond purchase could backfire in some ways. Berner says a bit of relief in mortgage rates will drive more people into the market, and when more people are buying at the same time, home prices go up."The whole goal here is affordability and lower mortgage rates do mean better affordability," Berner said, "but not if it comes at the same time as an increase to home prices. They're walking a very fine line here, and we'll be interested to follow how it works out." ...read more read less