Why Mortgage Rates Could Get Worse Under Trump’s New Fed Chair

Why It Matters

Higher or sticky mortgage rates would squeeze housing affordability, slow transaction activity, and reshape decisions by homebuyers and investors; financial markets and lenders may also reprice risk if inflation proves persistent.

Summary

President Trump nominated and the Senate approved a new Federal Reserve chair who is widely expected to press for lower policy rates. But housing-market analysts warn that cutting the Fed’s benchmark could worsen inflation already driven by the Iran war and higher energy costs, prompting lenders to keep or even raise mortgage rates rather than pass cuts through to borrowers. Futures markets have largely priced out any Fed cuts this year, and some traders now see a risk of rate increases in early 2027. As a result, hopes for near-term relief in mortgage borrowing costs appear to have dimmed.

Original Description

A new Fed chair is in. But don’t expect mortgage rates to fall overnight.

Jonathan Miller joins TRD to explain why lower Fed rates don’t automatically mean cheaper mortgages — and why the market may be bracing for borrowing costs to stay elevated.