Fannie Mae and Freddie Mac agreed to expand their purchases of American mortgages and related securities after the Bush administration reduced the amount of capital the companies are required to hold as a cushion against losses.

The government-sponsored enterprises had their biggest two-day gains on record in New York Stock Exchange trading as their surplus capital requirement was cut to 20% from 30% by the Office of Federal Housing Enterprise Oversight. The companies, the largest sources of money for American home loans, also agreed to raise a “significant” amount of new capital.

The goal is to “help restart the housing engine that powers our economy,” the chief executive officer of Fannie Mae, Daniel Mudd, said at a news conference in Washington yesterday. The CEO of Freddie Mac, Richard Syron, added: “This is what the GSEs were put in place for, to deal with situations like this and we will deliver.” The initiative may immediately pump $200 billion into the mortgage-backed securities market, the director of Ofheo, James Lockhart, said. Combined with a lifting of portfolio caps on March 1 and the companies’ existing capabilities, this should allow Fannie Mae and Freddie Mac to buy or guarantee $2 trillion in mortgages this year, Mr. Ofheo said.

This “is only good news” for Fannie Mae and Freddie Mac, an analyst at Portales Partners LLC in New York, Gary Gordon, said. “It shows that the political views of the companies have changed radically, it allows them to do more business which adds to earnings, and it has taken a lot of pressure off their capital worries.”

Fannie Mae rose $2.49, or 8.8%, to $30.71 yesterday in New York trading after surging 27% yesterday. Freddie Mac was up 15% to $29.90, a day after jumping a record 26%.

The looser constraints will “go a long way to stabilizing panicky markets,” an analyst at Fox-Pitt Kelton Cochran Caronia Waller, Howard Shapiro, wrote in a report to clients Tuesday. The housing market should begin to stabilize by the end of this year, Mr. Lockhart said in an interview with Bloomberg Television.

The worst housing slump since the Great Depression is being exacerbated by the limited ability of Americans to get mortgages or refinance loans amid tightened standards at money-losing banks. Issuance of non-agency mortgage bonds fell 33 percent last year to $707 billion, according to newsletter Inside MBS & ABS.

The National Association of Home Builders said yesterday’s action falls short of what’s needed to revive the housing market.

“We were expecting a much bolder step,” the chief executive officer of the association, Jerry Howard, said in a statement yesterday. His Washington-based trade group represents 235,000 members involved in residential construction, remodeling, and manufacturing.

Created by Congress to boost homeownership, Fannie Mae and Freddie Mac profit by holding mortgages and mortgage bonds as investments and by charging a fee to guarantee and package loans as securities. They own or guarantee at least 40% of the $11.5 trillion in U.S. residential-mortgage debt outstanding.

Fannie Mae and Freddie Mac have said they were limited in how much assistance they could offer amid regulatory limits and rising losses. Fannie Mae, the largest source of money for home loans, posted a record $3.55 billion fourth-quarter loss as rising foreclosures sent credit costs soaring. Freddie Mac reported a record $2.45 billion net loss for the period.

The 30% surplus capital constraint most recently tied up as much as $53 billion at the two companies combined — based on core capital on December 31 — that could have been invested in the mortgage market.

Yields on Fannie Mae’s five-year debt over five-year U.S. Treasuries fell 2 basis points to 88 basis points as of 6 p.m. in New York, down from 115 basis points on March 14, according to data complied by Bloomberg. The difference in yields on the Bloomberg index for Fannie Mae’s current-coupon, 30-year fixed-rate mortgage bonds and 10-year government notes fell about 9 basis points, to 175 basis points, above the three-week low hit when speculation about the move started March 17.

The companies didn’t say today how or when they would raise the additional capital. The increase in capital won’t “dilute shareholders if they have a good return,’ Mr. Lockhart said in the interview. “It could have a very good return for shareholders.”

Fannie Mae in December raised $7 billion in a preferred stock sale and cut its dividend by 30%, while Freddie Mac in November sold $6 billion in preferred stock and halved its dividend to bolster cash reserves amid mounting credit losses and asset writedowns stemming from the housing market collapse.

“It’s critical for them to have additional capital,” Mr. Lockhart said at the news conference. “These companies are safe and sound and we’re going to ensure by our everyday oversight that they continue to be safe and sound,” Mr. Lockhart said.

Credit-default swaps tied to Fannie Mae’s senior bonds were unchanged at 58 basis points after dropping in early trading yesterday, according to broker Phoenix Partners Group in New York. A decline signals an improvement in investor confidence. Freddie Mac also was unchanged at 58 basis points.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

The capital surcharge is one of the last remaining restrictions imposed on the companies after $11.3 billion of accounting misstatements. The Bush administration, trying to stem the crisis, has gradually eased constraints on Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac. Ofheo lifted a ceiling on the companies’ mortgage assets and raised a limit on the loans they buy to $729,750 from $417,000 in some counties.