Housing News

President Trump Taps Kevin Warsh as Next Fed Chair: Will Mortgage Rates Fall?

The Federal Reserve could soon have a new chief.

President Donald Trump announced Friday that he plans to nominate Kevin Warsh, a former U.S. Federal Reserve governor, to lead the nation’s central bank when current Chair Jerome Powell’s term ends in May.

“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump wrote on Truth Social.

The appointment could signal a shift in the Fed’s approach to interest rates that could impact homebuyers and homeowners in the months and years ahead.

While the Fed doesn’t directly set mortgage rates, it does influence which direction they move.

Warsh’s nomination first requires Senate confirmation.

Who is Kevin Warsh?

Warsh, 55, would bring extensive experience to the role. He previously served on the Federal Reserve Board of Governors from 2006 to 2011. At the time he was the youngest Fed governor in history when he was appointed at age 35.

Warsh is currently a fellow at Stanford University’s Hoover Institution and a lecturer at the Stanford Graduate School of Business.

He previously worked as an economic adviser in the George W. Bush administration and as an investment banker at Morgan Stanley.

What does Warsh mean for interest rates?

Warsh’s pending nomination comes at an important time, especially for those interested in buying a home or refinancing an existing home loan.

The Fed, under Powell’s leadership, cut its benchmark interest rate three times towards the end of 2025. (The Fed typically raises rates to combat inflation and lowers rates when inflation comes down and to stimulate the economy if unemployment rises.)

The Fed held rates steady at its first meeting of 2026, leading mortgage rates to remain basically unchanged in the last week.

The Fed and its policies have a significant impact on mortgage rates. The Fed sets the Federal Funds rate, the interest rate that banks charge each other for overnight loans. While the Fed’s rate decisions don’t impact mortgage rates directly, mortgage rates often move in the same direction.

When the Fed increases its rates to fight against inflation, it can lead to higher mortgage rates. Conversely, if the Fed cuts its rates to spur the economy, mortgage rates tend to decline.

What will Warsh do as Fed Chair?

In recent months, Trump has criticized Powell for not cutting interest rates quickly enough. This public pressure has raised questions about the Fed’s independence.

Warsh’s views on interest rates have changed somewhat over time. Earlier in his career, he supported higher rates to address inflation. But he has more recently argued for lower rates.

However, while Warsh would have power as Fed Chair, he would not be able to change interest rates singlehandedly.

Interest rate decisions are the result of a vote of the Federal Open Market Committee (FOMC), which includes other Fed governors.

Multiple voting members of the FOMC have expressed caution about cutting rates too quickly. They want to see more evidence that inflation is moving toward the central bank’s 2% goal.

The markets expect at least one rate cut this year. Under Warsh, that could change.

The key question is: Will borrowing costs come down? While a new Fed chair could influence the direction of monetary policy, the pace of rate cuts will ultimately depend on economic data, inflation trends, and the collective decisions of the Fed governors.

The bottom line for homebuyers and homeowners is that the Fed’s leadership transition is likely worth watching. But they shouldn’t expect dramatic changes to mortgage rates overnight.