Mortgage Loans/ Credit Cards And The Fed

MORTGAGE LOANS

On Friday, for the first time in months, the average interest rate for a 30 year mortgage fell below 6%. Specifically, it dropped to 5.99%, from 6.21% just one day earlier, according to Mortgage News Daily.

The reason? Donald Trump publicly stated that he instructed his people to purchase $200 BILLION in mortgage bonds. This announcement alone triggered an immediate decline in mortgage rates.

Bill Pulte, head of the Federal Housing Finance Authority, stated that Fannie Mae and Freddie Mac have already begun purchases totaling $3 billion. This move could potentially double their mortgage bond portfolios.

So what does this mean in practice? It translates into lower monthly payments for households and a potential increase in housing demand, assuming incomes and home prices allow it.

---

CREDIT CARDS

At the same time, Trump announced that he wants to impose a 10% cap on credit card interest rates starting January 20. From today’s average level of 21%, this would be a massive change.

Markets reacted immediately, with bank stocks such as JPMorgan, Bank of America, and Citigroup falling by as much as 4% following the news.

Analysts warn that banks may (a) restrict access to credit, (b) introduce new fees, or (c) see customers migrate to more expensive alternatives such as Buy Now, Pay Later services.

That said, the legal framework for such a move remains unclear, and many believe he does not have the authority to impose it unilaterally.

---

POWELL UNDER INVESTIGATION

As if all this were not enough, Federal Reserve Chair Jerome Powell is now under an official criminal investigation by the Department of Justice regarding his testimony before Congress about the costly renovation of the Fed’s main building, a project now estimated to exceed $4 billion.

The investigation reportedly focuses on whether he intentionally misled Congress with false statements. Powell, in a public statement, argued that this is a political attack, part of ongoing pressure from Trump for the Fed to cut interest rates more aggressively.

He emphasized that the independence of the central bank is at risk and that the criminal inquiry is not merely about a construction project, but about the Fed’s ability to operate without political interference.

Janet Yellen, former Fed Chair and Treasury Secretary, along with Bernanke, Greenspan, and Paulson, publicly supported Powell. They described the situation as an unprecedented attack on the institutional independence of the Federal Reserve, noting that it resembles emerging markets with weak institutions rather than the United States.

---

WHAT WALL STREET SAYS

“So what does Wall Street say about all this?” you might ask. Analysts from UBS , JPMorgan , and Raymond James believe Trump’s moves are more political than economically well planned. There is no coherent economic strategy, but rather a mix of interventions aimed at creating short term economic relief and a positive climate ahead of elections. This, however, creates inconsistency, uncertainty, and confusion in the markets.

That said, investment houses also see positive scenarios. JPMorgan is betting on easing inflation in 2026, with slower wage growth, moderation in service prices, and a potential decline in oil prices, all of which would give the Fed room to support growth. Combined with rising corporate earnings, this could lead to valuation expansion and gains in cyclical sectors.

UBS, on the other hand, believes that a cap on credit card interest rates, if implemented, would likely be temporary and have a limited macroeconomic impact, as banks would find ways to protect their margins through alternative fees or tighter lending standards.

The common thread across all analyses, however, is one word: UNCERTAINTY. And this dominates every report, as political involvement in economic policy becomes increasingly intense, raising questions about what comes next.