The White House game plan to lower mortgage rates

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the Trump administration’s efforts to lower mortgage rates.   Related to this episode:   Mortgage affordability at four-year high after rates fell in January  https://www.housingwire.com/articles/mortgage-rates-refinance-2026/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   To learn more about Trust&Will visit trustandwill.com   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about mortgage rates and

00:15whether the White House or the Fed can really lower them from where we are now. Before we jump

00:19in, I want to thank our sponsor, Trust in Will, for making this episode possible. Logan, welcome

00:24back to the podcast. And here we are in person because of the Housing Economics Summit. Yes,

00:29by the time this podcast comes out, I get to be with all my economic nerdy friends for a day. And

00:36I get to see Mike Simonson, who I haven't seen for a while. So I'm a happy camper.

00:41It is going to be amazing. Okay, let's get into it. Let's get into rates because we've had things

00:48coming out from the Fed. We've had the Trump White House posting on social that they think they can

00:53get mortgage rates down 50 basis points. Let's talk about that and what you see there.

00:58So I think there's obviously a midterm push. I think ICE came out with an article saying that

01:05affordability is at the best levels of four years. Obviously, mortgage spreads, which were getting

01:13better toward the end of 2025. And then when that announcement came, had another little extra leg

01:20lower. I know Pulte talked about G fees coming lower out here, but it goes back to our original

01:28premise we did November 7th, 2024 after Trump won. If this whole Trump game plan to work, he needs

01:35lower energy prices, he needs a lower dollar, and he needs lower rates. And energy prices have come down.

01:42He's got the dollar lower. He wants that last Trinity impact. And he's gotten rates down to near 6% where

01:49things start to move a little bit better. So I think I just want to push that through by getting

01:54a message out there. And it's not just him. Every institution, I always say, has summer camp members

02:00and they run around and they market stuff. And kind of the push is that the Truflation private sector

02:09inflation report is now showing inflation under 1% growth. And the Fed, Kevin Walsh is going to cut

02:17aggressively because of that or needs to cut. And that's not how it works. You know, Kevin Walsh can't

02:23unilaterally cut rates. But I see the summer camp people doing this marketing push about this. And

02:31I think Kevin Walsh, like Lisa Cook, oddly enough, talks about productivity gains being

02:38supercharged or better than normal. And because of that, there's more room to cut rates. But

02:44really, it's a committee. And you have some hawks there who are not so concerned about the labor market.

02:52We're going to get a jobs report on Wednesday. And I'm a labor overinflation guy. And technically

02:58speaking, that 10-year yield didn't break that key level. And it's been bouncing up. And that just

03:03take a little line and draw it up. We're still kind of in an uptrend from that low point. And

03:08mortgage rates look pretty normal to me considering everything that we have here. But there's limits

03:16to what the White House and the Fed chairman can do in this situation.

03:22I think the thing that strikes me is, okay, so you mentioned the jobs report, right? This is the

03:26jobs Friday report that will be released on Wednesday because we had the government shutdown. So we're

03:31getting that late and later than we normally would. But I feel like Trump sort of is in a catch-22

03:36because he wants to say that jobs are doing great, right? The country is doing well. But if jobs are

03:42strong, then you shouldn't be cutting rates. But he wants to cut rates.

03:46Well, it really depends on where you think inflation and where neutral policy is.

03:53Obviously, the jobs data, the growth has slowed down to 21st century lows. Now everyone's talking

03:59about what's the run rate, population growth has slowed down. Kevin Hassett, the head of the

04:04Economic Council, came out this morning and said, hey, listen, if the jobs report is light, don't freak

04:10out about it. People are now throwing up numbers that 15,000 to 25,000 jobs, it'd be like, good.

04:16And it's, you know, I understand the population growth theme, but manufacturing jobs have been losing

04:25jobs since early 2023. Residential construction workers, specialty contractors have been losing

04:31jobs for a few months now. Even the residential construction workers for the builders and remodeling,

04:39they've been having a slight downturn in employment. So there is policy out there. So it's not all

04:47population growth. And the main thing is that if it was a lack of labor, wages, you know, there would

04:53be a hunt for labor and wage growth would pick up, right? You don't have that. Job openings has fallen.

04:59The unemployment rate has risen. We have more unemployed people than job openings.

05:04Wage growth is slowing down. This isn't just a population growth slowdown. So politics is

05:11politics, but a little bit better footing for the housing market with rates near 6%. Now with the

05:19spreads almost back to normal and volatility, it's compressed. A John meme, you know, just out there

05:25dancing. John Hamm. John Hamm just chilling, you know, and if you look at rates, really the last two or

05:32three weeks with all the crazy headlines and everything we're talking about, not much movement

05:35out there. And that's the volatility compressing. But I don't, I'm more curious because now that Kevin

05:43Warsh is the guy, he's technically the shadow fed president now going into when he's, when and if he gets

05:53past Congress and gets approved. But it is interesting to me to see what he says about the labor data.

06:02Because, you know, if he says, hey, listen, if he's a Christopher Waller, Christopher Waller,

06:06who I wanted as Fed chairman, basically said, hey, the labor market is softer than everyone says.

06:12All these revisions are going to be negative. Policy is too restrictive. So, you know, he's not

06:18afraid to say it where I think Warsh might be, you know, where Kevin Warsh did say housing is in a

06:25recession, we have to get that back. Warsh might be more in the productivity camp, we can cut rates

06:31lower. But, you know, there's, it's, it's just so hard for me to get the 10 year yield below 380 and

06:38mortgage rates really below 5.75, unless, you know, the spreads get better, labor data gets weaker,

06:44just because if we're a neutral policy at three or three to two, three more rate cuts,

06:49we don't really have historical data to get rates too much lower from that. So,

06:54interesting year. Well, we'll see what Warsh says from now on. I think that's going to be the

06:59new variable now that he's the Fed person. But you have so many people on the internet that are

07:04saying, Fed has to cut rates, inflation's under 2%. Just remember the true inflation report that a

07:10lot of people see showing inflation really coming lower on a year-over-year basis. The inputs for that

07:16data line are much different than the PCE inflation. So the Fed governors don't really care about true

07:21inflation. It's, there's a, there's a commodity monthly index in that, that really moves the stuff,

07:26especially early in the month. And I, I, I, so much, I just see so many people using that as the

07:34lever for the Fed to cut rates. I don't believe the Fed governors care about that type of sexual line.

07:39So in your, in the Housing Wire 2026 forecast, which you wrote, right, you have the mortgage rate

07:47range. The low end of that is 5.75. And you just, you just referenced that. I think everyone in our,

07:53in our industry would be thrilled with that. So that, that doesn't have to go down that much from

07:57where we are to, to get under six. What do you, what do you think that is?

08:01I mean, near six is just makes it work. And not only that, the volatility is less.

08:05Right.

08:06See, so it's, it's just a bunch better atmosphere, but you know, what if the labor data starts to

08:12improve? You know, what if you want to run an economy hot in a midterms year and you get a little

08:17bit of growth? I mean, the problem with, I see people saying, well, population growth is slowing down.

08:22So 35,000 or 25,000 is fine. Well, what if you get 75,000? Then you're going to get fed governors

08:30saying, Hey, look at the labor markets, not breaking. We could keep policy as is. And this

08:34is the fight between Warsh and the Hawks where a Christopher Waller could have said, Hey guys,

08:40listen, I'm one of you, I'm here. Let's, let's just get maybe to neutral or slightly below neutral,

08:46just to make sure that, you know, we, we, we have the best backdrop for employment. So

08:51it's going to get tricky, you know, and I know it's productivity and truflation data that's

08:56really being pushed right now. So I, I'm more curious to see what Warsh says after these jobs

09:02reports, because there's only a few left before he becomes the new fit chair.

09:07Okay. A couple of years ago, if I had told you, listen, 25,000 jobs, that's going to be great.

09:12What do you think about that?

09:13I mean, I, you know, it's, it's interesting because for me in 2024, my job growth forecast

09:23was, was so much lower than everyone else's, but you know, these headline prints were so much

09:28bigger and I said, well, I have to wait for the revisions. By the time the revisions all came

09:33into place, we're kind of where I thought we would have been in 2024. So that looked fine to me.

09:402025, no.

09:41Uh, uh, and again, just historically speaking, when manufacturing jobs lose in construction,

09:48and we know, of course we have AI data center building, but when contractors and residential

09:53workers are all losing their jobs, that's not because of the labor, you know, uh, uh, capital

10:00costs to do business, of course, rates higher, but now that rates are lower builders, confidence

10:05data picked up a little bit and you know, we kind of see where it goes. So it, what it moves in waves,

10:11right? Nothing, you know, if, if rates were at seven and a half and 8%, much different conversation,

10:16but they're not. And one of the things I, I do with the tracker article now is I show people what

10:22would have been if the spreads were at the worst levels of 2023 today? Well, mortgage rates would have

10:27been 7.42%, but you know, they ended the week at a 615. Okay. So I read that in the tracker, uh,

10:34this last weekend when you wrote that I was like 7.42% is terrible. I'm so thankful we're not there,

10:40right? Let's talk about the tracker data though, because we finally saw some of the effects from

10:45that really severe winter weather. It, it held off for a little bit, but now it's in the data. What

10:50did we see? You know, I, I was anticipating, uh, uh, uh, something happening. So I was going to say,

10:56if, if, if, if it doesn't show up in this report, something, something's really off and the new

11:00listings data, even though it fell week to week, just a little bit,

11:04is now down year over year and like noticeably down year over year, uh, inventory growth didn't

11:10happen. Inventory falling a little bit would have been somewhat normal at this time, but inventory

11:15fell a little bit more than I thought. And of course the purchase application data had a 14%

11:20week to week dive. That's something that you might see if rates jumped up half a percent to 75 basis

11:25points in the following week, the app surveys take that in. Uh, uh, it'll all work itself out.

11:32It's going to be a little bit slower on the existing home sales report that's coming out this

11:36week than, than, uh, our weekly data, but our weekly pending sales data fell just a little bit.

11:42I was still looking for a bigger hit on that, but, uh, the year started off great. The year started off

11:48much better than I thought it could. Um, so this is really interesting. Um, is that when we look at

11:55like, uh, houses that had to take a price cut, we're now negative versus what the norm is. The

12:01norm is what 33%, one third of all houses, uh, every year have to take a price cut in order to

12:07sell because the sellers are like, yeah, no, my house is worth more than that. And so we finally

12:10got below that number this last week. Yeah. It is interesting because you had so many amateur

12:17people on the internet last year, just like rolling worst in 2008 storylines.

12:22Cause we did get up to like 40%. Well, I mean the, the, the, the curve was higher,

12:27but I mean, we have to, we have to realize that the, the inventory channels aren't exploding higher

12:32like they have. They've just, we have, we have a product out there that is not as affordable,

12:37especially with elevated rates. Well, when did the housing market change?

12:41Mid June. Okay. So mid June, what happened? Supply and demand equilibrium. We always want

12:45to teach that all of a sudden rates started to go lower, but the growth rate of inventory

12:51started to like noticeably slow down. And then all of a sudden the 10 year yield and rates got below

12:55six points. And then the demand curve picked up and sales hit a nine month high, which, uh,

13:01I think some people were thinking sales were still declining in the second half of 2025. But, um,

13:07um, now the price cut percentage is slightly lower, nothing spectacular, just slightly lower. So it's

13:13just, it's, it's, it's a thin line of that supply and demand equilibrium out there. So, uh, um, I think

13:19for some, some people were very surprised to see the year over year decline in the price cut, but keep

13:24it simple. Same thing kind of happened at the end of 2022 mortgage rates went from 7.37 all the way

13:32down to near 6%. We had 12 weeks of positive data. We had one really big home sales and the price cut

13:38percentages, uh, uh, uh, started to, uh, improve. However, inventory got it. We were at 1.33% year

13:48over year growth last year, and now it's 8.76. Wow. And, uh, um, some of that, you know, of course the,

13:55the week to week data got hit by the snow, but that trend has been here now it's seven, seven months now.

13:59Uh, and that's what the tracker was designed. The tracker was designed to be three to six

14:05months ahead of fake housing experts on the internet and kind of show people how the forward

14:10looking data. And it's, it's not, it's not shocking to me. I think the interesting aspect is

14:16if the slope of the curve still stays the same, because we have high comps, we might have some

14:20negative year over year inventory as well to go with negative year over year price. It doesn't feel

14:25like 2008. No, it really does not. I don't know. I think some of the people who keep on saying it's

14:302008 or worse, worse, man, you've been good homies, man. It's one thing to do with the 2008 crowd,

14:38the zero hedge and the rush, but to go worse than 2008, it's funny because ice came out with this,

14:44their delinquency data and the delinquency data is just really low historically. So I'm just like,

14:50I remember 2008. It's almost like over 11% and it's like near all time low. So again, reading,

14:57right. And to my father who I question, if you ever read any of my work.

15:01Oh, but he does listen to the podcast.

15:03Yeah. Dad, dad, dad, dad texted said, Hey, what do you mean? I don't listen to the podcast. I listen.

15:09I say, there is a part in the tracker that talks about the spread every single weekend. So when you

15:14say, send me an article about the spreads, it's there every weekend. It talks about the spreads.

15:20It has a whole little thing about the spreads. It has a nice little chart about the spreads too.

15:24So. Hey, but at least he's listening. Hello, Mr. Motoshami. We're glad you're listening here.

15:29Or how I call him Darth Vader. You know, that was his nickname growing up.

15:34That does not seem right. One of the things about the tracker that I think is so great is that

15:39we're looking at it week to week and you can, you can analyze it because like what you said,

15:44is like, yes, we're going to have this big drop and there are going to be people who are going to

15:47say, Oh my gosh, you know, everything's terrible. And then when we have a big rebound,

15:51they're going to kind of take that too much. It's like, there needs to be the understanding,

15:56the insight to like, what, what is the larger picture so that that week to week doesn't throw

16:00people off. You know, that's why a lot of people use four week moving averages for jobless

16:04claims for myself. Jobless claims spiked up last week as well. But if you looked at it,

16:09all the jobless claims are in snow states. So, um, uh, similar to what data is. So you,

16:14again, you, you just got to wait for it to play itself out. Last year, we talked so much about,

16:18you know, how a holiday can we, you know, mess up the week to week data, Christmas and New Year's

16:24were both in the middle of the week. So that just ruined that, uh, data line. And we'll see some of

16:28that in the existing home sales report in, uh, this week, but average it out, try to make sense.

16:35Again, the tracker is designed to do current and forward and not backwards, right? That's the

16:40difference. We don't want to wait for a report. We want to get ahead of it at least by a few months.

16:46And then this way, everyone has an idea of what they're doing with today, because by the time

16:51the report is, it's too old. And, uh, and then it's not just, you know, inventory say it's 10 year

16:56yield spreads, the economics of it out there. Remember I'm an economic person, first housing,

17:01second. And I just revolved my entire life around the 10 year yield. So you do. Okay.

17:06Let's give everyone, um, give us a very short description last year at the housing economic

17:13summit. You're, you know, the, the main point was like the worst is over. What is this year?

17:17Oh, this year you're all going to love a normal housing market again. Right. And, um, and that's

17:22why I always like to refer reference to the early 1980s and the 1980s had worse affordability

17:28than what we had currently. And the 1980s, everyone was going to be a renter. Nobody

17:33was going to move out of all the stuff that you hear now. We're actually here back then.

17:38And if you take newspaper clips going back a hundred years, there's always the same kind of

17:42theme that something happens and nobody's going to buy a house or anything. And then what traditionally

17:47happens is inventory rises, price growth cools down, wages rise, you know, households are formed,

17:53you know, affordability gets better that way. And then when rates fall down a little bit,

17:57affordability improves, you know, uh, the white house, uh, they tweeted our housing wire article

18:02showing that ice talked about a four year, uh, uh, uh, the best affordability of four years.

18:07And that's how cycles work. And because the spreads are back to normal, less volatility,

18:13you know, it's been a while. I mean, it has been a while. I mean, this is kind of things that we

18:19used to deal with in the previous decade. Of course, affordability is worse and rates

18:23are higher, but it's a normal backdrop, less drama, right? I mean, it's just kind of crazy

18:29considering the drama that's happening outside of. And, and I tell you, man, the reason why

18:35put a video of myself doing John, you know, Ham's meme is that in this period of time, uh,

18:42we have a lot of crazy headlines, but the bond market and the mortgage rates aren't moving as

18:46crazy, right? We have a lot of rate cuts in the system and the spreads are better.

18:5020, 23 was different. Why? Because spreads were improving and then the Silicon Valley

18:56banking crisis happened. And then the fed kept on hiking rates after the Silicon Valley, uh,

19:01crisis. So the spreads naturally would get worse in that year. Uh, and, uh, that's like,

19:07I always remind people, man, if it's 20, 23, worst spreads, 7.42% rates, but we're at 615 at the

19:14end of last week. So nor a little bit normal, calm. It's good. You know, it's, it's, it's,

19:21it's the, the, the less drama, the better. And economics done right should be boring, but a,

19:27a boring housing market is something we could all enjoy and everybody can make choices and

19:32people could live their lives and millions and millions of people buy homes every single year.

19:35Uh, that, that hasn't changed for decades. And, uh, this will be another year of that, but this time

19:40water bill is a little bit better rates are lower, more stability. Oh, you're going to learn to love

19:46this housing market compared to the craziness we had in the past. We are. Okay. Also, uh, for this

19:52episode, we're going to release some like fast thing that shows how much you move your hands and

19:57how my, my hands have not moved. And you are like, I'm an ex high school basketball coach.

20:02Could you imagine me? You know, I'm out there running around, calling plays out, telling people

20:06and getting right defensive. So this is just normal. Cause normally in your, in the normal shot,

20:11we can't see your hands all the time, but here we can see your, I never sat down as a coach either.

20:15So this is just, you're putting me in my normal environment. Sarah, please hold your hand. Stop

20:22moving. Stop hitting the thing. You can hear it. Anyway. Thank you so much for being here. And

20:27especially, um, really looking forward to tomorrow when you're going to give us your insights at the

20:32housing economic summit. Um, we will talk again soon. Pleasure.

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