Mortgage Rate Relief Under Warsh May Prove Elusive, Experts Say

At first glance, Kevin Warsh’s nomination as the next Federal Reserve chair could be interpreted as a signal that benchmark interest rates may fall — potentially offering some relief on housing affordability as President Donald Trump and his administration have repeatedly pressured Jerome Powell and other Fed officials to move in that direction.

Housing industry experts, however, are taking a more cautious view of Warsh’s term — which would begin in May if he is confirmed by the Senate — and its implications for the broader market. Persistent tensions within the Fed’s dual mandate — price stability and maximum employment — remain unresolved, and these challenges are being debated by a Federal Open Market Committee (FOMC) that has grown increasingly vocal about internal disagreements.

Warsh’s path to the Fed’s top post starts with his succession of Fed Governor Stephen Miran on Feb. 1. Miran, seen as a Trump loyalist, was appointed following Adriana Kugler’s resignation in August 2025. Since joining the committee, Miran has advocated for a faster pace of rate cuts and has frequently dissented from the majority.

Realtor.com senior economist Jake Krimmel noted that the FOMC “is not ideologically unified,” and that its newest rotating voters are “likely willing to push back when the data do not support a particular path.”

“This is not a crisis environment where the chair naturally accumulates outsized authority or a voting majority coalesces around the chair’s interpretation of the data,” Krimmel said in a statement. “If anything, it’s an environment where building consensus is harder and where the new Chair’s power is likely weaker, not stronger than usual.”

Krimmel added that Warsh may find it harder to win over colleagues in ways the current Fed chair has managed, potentially resulting in “less clear guidance from the Fed and noisier signals for markets.”

Warsh previously served as a Fed governor from 2006 to 2011 and is currently a partner at Duquesne Family Office alongside Stanley Druckenmiller. He is also a visiting fellow in economics at Stanford University’s Hoover Institution. Warsh still could face a tough Senate confirmation after the Justice Department issued grand jury subpoenas as part of a probe into Powell, sparking bipartisan criticism.

Monetary policy

Bill Banfield, chief business officer at Rocket Companies, said that Warsh’s nomination comes at a moment when “inflation credibility, fiscal pressure and housing affordability are all in focus.”

Warsh was referred to as a hawkish Fed official. In the past, he argued that inflation is a policy choice, was skeptical of quantitative easing and emphasized that the Fed’s greatest asset is its credibility. 

But Banfield said that more recently, Warsh has softened his tone, suggesting that shrinking the Fed’s balance sheet could allow policymakers to lower interest rates without reigniting inflation. He has also called for a broader “regime change” encompassing not only rates but also how the Fed communicates policy, exits emergency tools and restores credibility, Banfield added. 

“If you pursue a thoughtful approach to balance-sheet reduction while simultaneously lowering short-term rates, we could see mortgage rates remain stable or drift slightly lower,” Banfield said. “Ultimately, the impact will depend on policy decisions — but to keep it simple, ‘Follow the money.’ Where capital flows or doesn’t, alongside inflation expectations, will drive mortgage outcomes.”

The 10-year Treasury yield rose Thursday night amid reports of Warsh’s nomination. Some analysts interpreted the move as investors pricing in the risk of looser monetary policy in the near term necessitating higher rates over the longer term.

“This is a reminder that the Fed does not directly set mortgage rates,” Krimmel said. “An explicit focus on cutting its policy rate to lower longer-term rates could backfire, if credibility is questioned and signals become noisier. If policy motivations become harder to read, term premia rise, long-term yields move higher, and mortgage rates might not drop even if the Fed is cutting.”

Expected regulation

Mortgage and banking trade groups welcomed Warsh’s nomination, pointing to his prior experience on the Fed’s board.

Mortgage Bankers Association (MBA) president and CEO Bob Broeksmit said Warsh has developed a “reputation as a prudent, thoughtful voice on monetary policy,” paired with meaningful private-sector experience. Broeksmit called for a “balanced regulatory approach and a safe, resilient bank capital framework.”

“MBA will continue pressing for targeted regulatory improvements — including recalibrated capital treatment for mortgage servicing rights and warehouse lending under a revised Basel III capital framework — that encourage greater bank participation in single-family and commercial real estate markets,” Brokesmit added. 

Consumer Bankers Association (CBA) president and CEO Lindsey Johnson said Warsh’s “depth of expertise and understanding of the Federal Reserve’s dual mandate will be critical as the central bank navigates a complex economic environment and works to maintain stability, confidence and long-term growth.”

Scott Olson, executive director of the Community Home Lenders of America (CHLA), said the nomination “would bring a steady, experienced hand to the job — increasing the chances that we can responsibly bring down mortgage rates, which would be good for families looking to buy their first home.”