Homebuyers Waiting on Lower Mortgage Rates May Be Disappointed Despite New Fed Leadership

Homebuyers hoping for a meaningful drop in mortgage rates this year may need to temper expectations, even as leadership changes loom at the Federal Reserve.

President Donald Trump recently nominated Kevin Warsh to succeed current Fed Chair Jerome Powell when Powell’s term ends in May. While both Trump and Warsh have signaled openness to lowering interest rates, economists say that alone is unlikely to translate into substantially cheaper mortgages in 2026.

Mortgage rates remain above 6%, and analysts note they are driven by far more than Fed policy. Rates tend to track the 10-year Treasury yield, which is influenced by inflation expectations, economic growth and government spending pressures.

Charlie Dougherty, a senior economist at Wells Fargo, said elevated borrowing costs stem largely from inflation and fiscal conditions, not just central bank decisions. History also shows that mortgage rates don’t always fall when the Fed cuts — in some cases, they’ve risen afterward.

In an effort to boost affordability, Trump recently directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds. Federal housing officials say the move has been well received by markets, but economists caution the impact may be temporary.

Meanwhile, Daryl Fairweather, chief economist at Redfin, says broader challenges — including limited housing supply in high-demand areas — remain the primary driver of affordability problems. While Trump has taken steps to curb institutional investors from buying single-family homes, he has not unveiled a comprehensive plan to significantly expand housing inventory.

Despite the headwinds, there are early signs the housing market is slowly thawing. Mortgage applications rose in January, and more sellers are accepting that higher rates are likely here to stay. Analysts also point to rising incomes and slower home price growth as modest positives for buyers.

Still, experts agree that without a major increase in housing supply, most Americans should not expect dramatic relief on mortgage rates anytime soon.

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