How Trump's Pick For the Next Fed President May Affect Mortgage Rates

The tension between President Trump and current Federal Reserve Chair Jerome Powell has been building for months (even years), and it’s no secret: Trump wants Powell out.

Since Trump returned to the White House, the Fed under Powell hasn’t lowered interest rates a single time. In Trump’s words, any move now would be “too late” to capture the economic momentum he wants. For a president whose economic playbook depends on lower borrowing costs — especially for homebuyers and businesses — Powell’s go-slow approach has been a thorn in his side.

Now, with Powell’s term ending in May 2026, the Trump administration is laying the groundwork to replace him with someone more aligned with its goals: faster and deeper rate cuts, lower 10-year Treasury yields, and, by extension, cheaper mortgage rates.

If you’re in the market for a home — or even thinking about refinancing — this is more than just political theater. The person sitting in the Fed Chair’s office next summer could determine whether your mortgage rate is in the sixes… or the fours.

How the Fed Chair and Fed Funds Rate Impact Mortgage Rates

The Federal Reserve doesn’t set mortgage rates directly, but its policies heavily influence them. The Fed sets the federal funds rate — the overnight rate banks charge each other — which impacts short-term borrowing costs like credit cards, auto loans, and HELOCs. Just as importantly, it shapes expectations for long-term interest rates, including the 10-year Treasury yield that serves as the benchmark for most 30-year fixed mortgage rates.

When the Fed signals it’s ready to cut rates aggressively, the bond market often reacts by pushing the 10-year yield lower. Lower yields = lower mortgage rates. A dovish Fed Chair, one who sees inflation as contained and prioritizes growth, can create a path toward cheaper mortgages.

That’s why the person chosen to lead the Fed matters so much. The chair sets the tone for policy direction, influencing when and how aggressively rate cuts happen. For homebuyers, a chair inclined toward faster cuts could bring mortgage rates down by half a point or more within months — a shift that can dramatically improve affordability.

For a deeper breakdown, see our explainer: How Does the Fed Funds Rate Affect Mortgage Rates?

Trump’s Frustration With Powell

Trump appointed Powell in 2017 and while they never really got along, Trump has become his harshest critic — a feud that has reached new heights in his second term. Beyond calling him “Too Late” for not cutting rates sooner, Trump has publicly said Powell’s “termination cannot come fast enough” and has repeatedly urged him to resign. At a July Oval Office meeting, Trump even showed Republicans a draft letter firing Powell, later telling reporters Powell would be “out of there real fast” if he wanted him gone.

His barbs have been personal, calling Powell a “moron,” “like talking to a chair,” and someone with “no high intelligence, no nothing.” In one Truth Social post, he demanded, “Lower the Rate, Too Late!” and in another said, “I’d love it if he wants to resign.” While Trump has occasionally equivocated — saying it’s “highly unlikely” he would fire Powell unless “he has to leave for fraud” — his attacks have been relentless, with over 40 separate public criticisms since April 2025 alone.

On August 13th, Trump told reporters he has narrowed his list of Powell’s potential successors to “three or four” people and plans to announce the decision earlier than expected. Speaking at the Kennedy Center, he called the candidates “all good, all great” but again took aim at Powell, describing him as “truly incompetent” and blaming him for making it harder for Americans to get affordable mortgages. “They’re paying too much because of Jerome ‘Too Late’ Powell,” Trump said.

The Search for Powell’s Replacement

Treasury Secretary Bessent is leading the search and interviewing from a list of 11 names, including Fed insiders, Trump allies, and private-sector heavyweights with deep market experience. 

The Shortlist So Far

Christopher Waller - Fed Governor, appointed by Trump. Advocates for policy moves based on forward-looking data rather than waiting for lagging indicators. First Fed member to be in favor of cuts in 2025 (voted for a 0.25% cut in June).

Michelle Bowman - Current Fed Vice Chair for Supervision, appointed by Trump in 2018. Known for her pro-growth stance and willingness to dissent in favor of cuts (she voted for a 0.25% cut in July).

Philip Jefferson - Current Fed Vice Chair, appointed by Biden in 2022, confirmed with broad bipartisan support. Academic background in economics, reputation as a consensus-builder, and has supported holding rates steady this year.

Lorie Logan - Dallas Fed President, former head of the Fed’s securities portfolio at the New York Fed. Skilled in market operations, cautious on rate cuts given tariff-driven inflation risks.

Kevin Hassett - Former Trump economic adviser and current NEC director. Strong advocate for growth-focused, pro-business policies.

Kevin Warsh - Former Fed Governor, previously considered for the chair role in 2017. Market-friendly, leans toward deregulation.

James Bullard - Former St. Louis Fed President, supports rate cuts if inflation remains controlled.

Marc Sumerlin - Former Bush administration official, macroeconomic consultant with Republican ties.

Rick Rieder - BlackRock’s global fixed-income CIO, widely respected in bond markets.

David Zervos - Jefferies’ chief market strategist, known for his market-savvy monetary policy analysis.

Larry Lindsey - Former Fed Governor and senior economic official in the Bush administration.

The Immediate Move: Stephen Miran Joins the Board

Before the chair appointment, Trump is already reshaping the Fed from the inside. He’s nominated Stephen Miran, currently chair of the White House Council of Economic Advisers, to an open Board of Governors seat.

Miran is a clear ally on rate cuts, echoing Trump’s view that borrowing costs are too high. His term runs through January, but Bessent has hinted Miran could be asked to stay on longer — potentially positioning him as a candidate for chair.

What a “Dovish” Fed Chair Means for Homebuyers

A Fed Chair aligned with Trump’s push for lower rates could have several housing-market effects:

• Lower borrowing costs – A drop in the 10-year Treasury yield could bring mortgage rates down by 0.50% to 1.00% within months.

• Increased affordability – Buyers could qualify for larger loan amounts without raising their monthly payments.

• Refinance wave – Millions of homeowners could move from high-6% rates into the 5s or even high-4s, freeing up disposable income.

• Market stimulus – Lower rates could spur demand, especially in high-cost markets where affordability is tight.

And here’s the key: markets price in the future. Announcing a Fed Chair who is viewed as extremely dovish could cause mortgage rates to start falling immediately, even before the new chair takes office. That’s because investor expectations for future rate cuts directly influence today’s 10-year Treasury yield, which in turn drives mortgage pricing. If Trump announces his pick early and the markets believe aggressive cuts are coming, we could see an immediate drop in rates well before any policy changes actually occur.

For buyers sitting on the sidelines today, the shift could be a game-changer. If you can lock in a property before rates drop — and then refinance later — you could capture both a better price and a lower long-term rate.

Why It’s Not Guaranteed

Even if Trump gets his pick, there are no guarantees after all Trump picked Powell and we're seeing how well that's worked out for him. The Fed operates independently, and even dovish chairs must balance growth goals with inflation risks. A sudden spike in prices — especially from tariffs or energy shocks — could delay or limit cuts.

Still, personnel is policy. A chair sympathetic to Trump’s priorities makes lower mortgage rates far more likely than under Powell’s cautious approach.

The Bottom Line for Homebuyers

The next Fed Chair will take office in mid-2026, but markets will start reacting the moment the nominee is announced. That means mortgage rates could begin moving well before the chair actually takes the gavel.

If you’re planning to buy in the next 12–18 months, now’s the time to:

• Get pre-approved

• Watch the Fed chair selection process closely

• Be ready to buy just before rates start to dip — because locking in a home right before a drop lets you capture both a better purchase price and a lower long-term rate.

Because in housing, the winners aren’t just those who buy at the bottom — they’re the ones who position themselves to move when opportunity knocks.