Trump's $200 billion mortgage policy sparks "quantitative easing" controversy—can interest rates really be lowered?

In early 2026, U.S. housing finance policy once again became a market focus. It has been confirmed that U.S. housing finance agencies will implement President Trump’s latest order, planning to purchase up to $200 billion in mortgage-backed securities (MBS). This move was quickly interpreted by the market as a new round of “quasi-quantitative easing,” and analyst Richard Mize referred to it as “QEx (Extended Quantitative Easing).”

However, unlike the market enthusiasm when traditional quantitative easing policies were introduced, the response this time has been notably冷. Many macro observers believe that this policy tool is not unfamiliar; it resembles old methods used during crises, but appears at a rather controversial time.

The current core disagreement centers on whether the interest rate transmission mechanism remains effective. Richard Mize publicly questioned whether large-scale purchases of mortgage-backed securities can still significantly lower U.S. mortgage rates in 2026. The reason is that U.S. inflation has already cooled significantly, and the Federal Reserve has previously signaled a relatively accommodative policy stance, with markets already expecting interest rate declines. Against this backdrop, further asset purchases may have diminishing marginal effects that are preemptively priced in.

Historical experience shows that quantitative easing has effectively lowered mortgage rates by increasing bond demand and reducing long-term yields, especially during financial crises or liquidity crunches. But the issue is that the macro environment in 2026 is fundamentally different from crisis periods. The current financial system operates relatively smoothly, market liquidity is ample, and risk premiums are not high, which significantly constrains the actual impact of policy stimulus.

Therefore, market uncertainty is rising. Policy tools that once could quickly change market direction are now facing the reality of “diminishing returns.” Investors and financial institutions are more concerned not with whether the policy scale is large enough, but whether mortgage rates will truly experience substantial downward movement.

If borrowing costs cannot respond clearly to such quasi-quantitative easing measures, the debate over whether Trump’s mortgage policy constitutes a new round of quantitative easing will continue to ferment. The final answer to this discussion may only be revealed when interest rates truly change.