Evercore ISI analyst Stephen Kim told investors in a note this week that they can get ahead of themselves following the sharp decline in US mortgage rates caused by President Trump's decision to authorize Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities. The announcement resulted in "a 15 basis point decline in mortgage-backed securities yields" and lowered the average mortgage rate to 6.0%, according to Freddie Mac's weekly survey.

The move has sparked speculation that borrowing costs could fall significantly lower.

The president is expected to announce additional housing-related measures during his Davos speech next week, fueling investor optimism. However, Evercore ISI urges caution. Kim said it's "not their custom to make strong forecasts" for rates, but warned that investors "may currently be overestimating how low borrowing costs will fall in the near term."

According to the note, mortgage rates "appear to already be priced in for the potential for additional good news at Davos," and the path to significantly lower rates is "more complex."

The analyst also noted that the administration's strategy likely involves more than just lowering mortgage rates.

"We believe they also intend to increase housing supply, and this could happen by influencing publicly traded homebuilders to build more homes than they would like and invest in growth rather than returning cash to shareholders," Kim wrote. "Neither of these options would be particularly encouraging for investors."