Scott Bessent Says MBS Buybacks Aim to Match Fed Run-Off

 Byline

By MD Rubel Islam / Global Finance News  

With reporting from Reuters  

Published: Jan 10, 2026 — 9:43 PM (GMT+6)

U.S. Treasury Secretary Scott Bessent speaks on MBS buybacks and the Federal Reserve’s balance sheet run-off.

• Scott Bessent Says MBS Buybacks Aim to Match Fed Run-Off

• Trump Administration Targets Fed Run-Off With MBS Buybacks, Says Bessent

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Bessent: Goal of MBS Buys Is to Match Fed Run-Off

Introduction 

The U.S. housing and financial markets are entering a new phase as the Trump administration moves to counter the Federal Reserve’s ongoing balance sheet reduction. At the center of this development is Scott Bessent, head of the U.S. Treasury, who clarified that new Mortgage-Backed Securities (MBS) purchases are designed to offset the Federal Reserve (Fed) monthly run-off. The Fed has been steadily reducing its Fed balance sheet, allowing about $15 billion in Monthly roll-off of MBS.

This move matters because mortgage rates remain elevated, keeping housing affordability under pressure. Policymakers, investors, banks, and homeowners are closely watching how MBS buybacks could influence mortgage rates, yield spread, and the broader housing market. With Donald Trump pushing aggressive economic policies through his administration, including large-scale bond purchases, the role of agencies like the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac has once again become crucial in shaping the future of U.S. housing finance.

Main 

Speaking to Reuters, Treasury Secretary Scott Bessent stated that the goal of the administration’s Mortgage-Backed Securities (MBS) purchases is to closely mirror the pace of the Federal Reserve (Fed) run-off. According to Bessent, the Fed continues to shrink its Fed balance sheet by allowing roughly $15 billion in MBS to roll off each month.

Under the Trump administration, the FHFA has been directed to support bond purchases by Fannie Mae and Freddie Mac, starting with an initial round led by FHFA Director William Pulte. While Bessent noted that these actions may not directly slash mortgage rates, they could narrow the yield spread between agency MBS and U.S. Treasuries.

Currently, the 30-year fixed-rate mortgage hovers well above pandemic-era lows, and policymakers hope this strategy can stabilize the housing market without destabilizing financial conditions.

 Sub-Sections

: Impact on Mortgage Rates and Housing Affordability 

One of the biggest concerns driving MBS buybacks is declining housing affordability. Although mortgage rates have fallen from their 2024 peak, the average 30-year fixed-rate mortgage remains historically high. The Fed’s continued Monthly roll-off of MBS has limited downward pressure on borrowing costs.

By matching the Fed’s run-off, MBS buybacks could reduce supply pressure in the secondary mortgage market. This may help narrow the yield spread over U.S. Treasuries, indirectly easing mortgage costs. For prospective homebuyers and lenders, even small shifts in rates can significantly affect monthly payments. While the policy is not a guaranteed fix, it signals renewed government involvement in supporting the housing market.

 Role of Fannie Mae, Freddie Mac, and FHFA 

The Federal Housing Finance Agency (FHFA) plays a central role in executing the administration’s plan. Under William Pulte, the agency has authorized Fannie Mae and Freddie Mac to use their own balance sheets for bond purchases. These government-backed enterprises package home loans into Mortgage-Backed Securities (MBS), providing liquidity to lenders.

According to Scott Bessent, the strategy could even improve earnings for both firms, countering concerns about financial risk. This renewed focus has also reignited discussions around the reprivatization of Fannie and Freddie, which have been under government control since the Global financial crisis of 2008. Any improvement in profitability could strengthen arguments for reducing federal oversight in the future.

 Fed Balance Sheet and Market Dynamics 

The Federal Reserve (Fed) still holds over $2 trillion in Mortgage-Backed Securities, accumulated during the Pandemic stimulus era and earlier crises. However, its commitment to balance sheet normalization has meant a consistent Monthly roll-off. Market analysts argue this reduction has kept mortgage financing tighter than expected.

By aligning MBS purchases with the Fed’s pace, the U.S. Treasury aims to neutralize some of the restrictive effects without directly challenging monetary policy. This delicate balance reflects coordination rather than conflict between fiscal and monetary authorities. Investors in U.S. Treasuries and housing-linked assets are closely monitoring whether this approach stabilizes yields without reigniting inflation fears.

: Political Context and Trump Administration Strategy

For Donald Trump, housing policy is increasingly tied to political strategy. Persistent affordability issues have weighed on public sentiment, pushing the Trump administration to seek visible solutions. Large-scale bond purchases signal decisive action while avoiding direct rate controls.

By emphasizing market-based tools through MBS buybacks, the administration positions itself as pro-growth and pro-housing. At the same time, renewed debate over reprivatization aligns with Trump’s broader push for reducing government ownership. The policy blends economic objectives with political messaging, making housing finance a key battleground ahead of future policy debates.

Search Trend Section 

Search interest has surged around keywords such as Scott Bessent, MBS buybacks, Fed balance sheet, Monthly roll-off, Fannie Mae, Freddie Mac, and mortgage rates. Users are actively searching to understand whether these policies will lower borrowing costs and improve housing affordability. Queries related to yield spread and U.S. Treasuries indicate strong interest from investors. Additionally, searches about reprivatization and the Trump administration reflect political curiosity. Overall, people want clarity on how government intervention in Mortgage-Backed Securities (MBS) markets could affect home prices, loan availability, and the broader housing market.

 Sports 

Away from economics, sports fans are focused on the upcoming NFL playoff race. Several teams are battling for final wildcard spots, driving high engagement across digital platforms. Analysts highlight how data-driven strategies—similar to financial markets—are shaping in-game decisions. Meanwhile, star player performances are boosting merchandise sales and online searches. This lighter news provides a contrast to complex financial headlines and helps drive overall reader traffic. As with markets, momentum and timing remain critical, whether on the field or in economic policy.