Trump Wants Cheaper Mortgages — but his Fed Pick Could Actually Make them Go up

With input from the Washington Post and NPR.

President Trump keeps pushing housing affordability as a headline issue — he wants mortgage rates down, fast. Trouble is, his nominee for Fed chair, Kevin Warsh, has spent years blasting the Fed’s massive $6.6 trillion portfolio of Treasuries and mortgage-backed securities as a market-distorting mess. If Warsh follows through and pressures the Fed to shrink that balance sheet, it could raise long-term borrowing costs — including mortgage rates — right when the White House wants them lower.

Warsh isn’t shy about calling for a smaller Fed footprint. The logic is straightforward: big central-bank holdings of long-term bonds helped push yields down after the financial crisis. Pull that support back and yields can move higher. For the average house hunter, that means pricier mortgages, not cheaper ones.

This creates a neat political irony. Trump is campaigning on making housing more affordable; Warsh’s playbook — aimed at reining in what he sees as an overactive Fed — could end up doing the opposite. It’s a tension between short-term political goals and longer-term monetary orthodoxy: presidents want low rates; many Fed veterans want policy that won’t stoke inflation or warp markets.

Why would Warsh get any traction? Because the Fed chair isn’t just “one vote” on a committee. The chair controls the agenda, shapes staff analysis, runs the communications machine and, critically, speaks for the central bank. That soft power — the ability to persuade colleagues and markets — means a chair who wants a downsized balance sheet can nudge policy even if they can’t literally command votes with a snap of the fingers.

Bottom line: nominating someone who’s publicly skeptical of the Fed’s bond holdings sends a signal the central bank could be headed for normalization that’s faster or deeper than markets expect. For homeowners and prospective buyers, that would likely translate into higher mortgage rates — an awkward outcome for an administration promising the opposite.