What is Quantitative Easing and How Does it Affect Home Buyers?

In this episode of the Listen Up Homebuyers! podcast, host Victoria Ray Henderson talks with Ramez Fahmy about the implications of President Trump's announcement regarding a $200 billion investment in mortgage-backed securities. This decision is aimed at lowering mortgage rates, but what does it mean for prospective homebuyers and the housing market?

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As the housing market continues to evolve, recent policy changes are reshaping the landscape for homebuyers. President Trump made the announcement in a post on Truth Social.

Quantitative Easing Explained

Ramez Fahmy explains that the government's approach is a form of quantitative easing, where entities like Fannie Mae and Freddie Mac buy loans to create demand in the market. This action is designed to increase bond prices and ultimately lower interest rates. By comparing it to measures taken during the COVID-19 pandemic, Ramez emphasizes the scale and expected outcomes of these interventions.

The Lock Effect and Buyer Behavior

The fall 2025 market in the Greater Washington D.C. and Baltimore area has experienced a shift. Houses have been for sale for longer periods of time and consequently, home buyers have had more power to negototiate the terms of an offer. The question now is-if interest rates decrease, will there be more buyers this spring with housing inventory is still relatively low? Ramez Fahmy introduces the concept of the "lock effect," where homeowners with lower mortgage rates from previous years hesitate to sell their homes, fearing they would have to secure a higher rate for their next purchase. He illustrates this with examples of clients looking to refinance at lower rates, highlighting the interplay between interest rates and homeowner mobility.

Current Market Dynamics

The podcast details how inventory levels vary across regions, with some areas experiencing slight increases while others remain highly competitive. Ramez Fahmy says that while interest rates may not drop to the incredibly low levels seen in the past, there is hope for rates to stabilize in the mid to upper 5% range. This stability could encourage more buyers to enter the market without driving prices up excessively, as witnessed in 2021.

Navigating Home Buying Strategies

One strategy for buying a home is not to wait for interest rates to drop to favorable levels. while buyers wait, home values rise and this means ultimately paying more for a property, even considering a possible lower interest rate. Ramez Fahmy advises buyers to consider the long-term gains of purchasing a home today, especially in light of expected property appreciation rates of 3-4% over the coming years.

The Role of Institutional Buyers

In addition, President Trump called on Congress to ban investors from acquiring single family homes, something many housing experts say is a major cause of the housing affordability crisis.

In some parts of the country, institutional buyers are purchasing homes in bulk to convert to rental properties. Ramez explains how this trend creates challenges for individual homebuyers, as it reduces the availability of homes for families. He mentions ongoing discussions about potential regulations to limit institutional buying, which could open up more opportunities for traditional buyers.

Conclusion

Interest rates remain a significant factor in the home buying process. Home buyers should seek out experienced local professionals who understand market dynamics like the lock effect and institutional buying trends. As with any important decision, begin with education. Ask a local exclusive buyer agent and mortgage lender what trends they see happening in the location where you want to buy a home. Learn if there are home buying programs that could help you save money on down payment costs. If possible, schedule a meeting, virtual or in person, with an exclusive buyer agent to learn the importance of evaluating locations, lots and properties well before you make an offer.

It is easy to fall in love with a house by seeing pictures online. The real story is discovered by consistent evaluation of properties and clear communication with trusted allies-your advocates in the home buying journey.

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Key Takeaways

1. The government’s investment in mortgage-backed securities aims to lower interest rates but may increase competition among buyers due to low housing inventory.

2. The lock effect is keeping many homeowners from selling, thereby limiting available properties in the market.

3. Waiting for rates to drop may not be a wise strategy, as home values are expected to appreciate.

4. Institutional buyers are influencing market availability, prompting discussions about regulatory interventions.

Ramez Fahmy is a local lender with First Heritage Mortgage in the Greater Washington D.C. and Baltimore area. Victoria Ray Henderson is the owner and broker of HomeBuyer Brokerage a consumer oriented real estate brokerage dedicated to serving home buyers.

How can we help?

The exclusive buyer agents at HomeBuyer Brokerage specialize in serving home buyers. Please reach out with questions at info@homebuyerbrokerage.com.