Can Trump get lower mortgage rates with Warsh at the Fed?

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the Fed meeting and housing starts.  Related to this episode:  3 quick takes on Kevin Warsh’s first Fed meeting https://www.housingwire.com/articles/warsh-fed-policy-housing/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire https://lnk.bio/housingwire  The Top 5:  3 quick takes on Kevin Warsh’s first Fed meeting https://www.housingwire.com/articles/warsh-fed-policy-housing/  Warsh era at the Fed begins with rate pause amid spiking inflation https://www.housingwire.com/articles/fed-holds-rates-inflation-mortgage/  Five lessons from the first half of the 2026 housing market https://www.housingwire.com/articles/2026-housing-market-first-half-review/  The ‘Beyond’ is brokerage: Bed Bath & Beyond’s surprising bet on real estate https://www.housingwire.com/articles/bed-bath-beyond-fathom-deal/  Congress reaches bipartisan agreement on ROAD to Housing Act https://www.housingwire.com/articles/road-to-housing-act-senate-vote/  Want more from Sarah? Don’t forget to subscribe! https://www.housingwire.com/subscribe/  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

00:09Welcome, everyone. My guest today is lead analyst Logan Motoshami to answer my questions about the

00:14Fed meeting and talk about housing starts. First, here are the top five trending articles on

00:19housingwire.com. Our Fed coverage is trending at the top, both the newsroom's initial story

00:24and Logan's analysis. Then we have five lessons from the first half of the 2026 housing market

00:30and the very interesting story of Bed Bath & Beyond buying Fathom Holdings. We have the initial

00:35story, but also a follow up piece. And that's the one getting a lot of attention as we sought to

00:40find

00:40out more about that interesting story. Finally, we have Congress reaches bipartisan agreement on the

00:47Road to Housing Act. Lots going on there. Logan, welcome back to the podcast. Or maybe you should

00:52say welcome back to me. Yes, welcome back. Where are you right now? I am in New York City. I'm

00:59in

00:59Brooklyn in a very cool Brooklyn apartment in the basement of my daughter's apartment. There's on

01:05one side, there's a sewing studio on the other. There's a recording like a musical area. My kids

01:10are so cool. So anyway, so yes, I'm in the basement, but loving it. Well, good, good, good. Of course,

01:16you weren't here on Fed Day. So we had to do a solo act. And as Rebecca would tell you,

01:23I properly

01:24behaved. There's no editing needed or anything. So no, I really appreciated it. Actually, I listened

01:29to it, learned a lot and loved your take. And I'm going to ask some follow up questions today because

01:33there's all sorts of things that are, you know, people have questions about, but I thought you did

01:38a great job. So, you know, thank you for doing that. So it's Thursday morning. Of course, yesterday,

01:44the 10-year yield right now, as I'm talking to you, is 4.43. And kind of how we frame

01:49this always

01:50is that if the conflict's over, oil's at $75, that's perfectly acceptable, where the Fed would

01:57be, the Fed should be fine with that. 10-year yield should be 4.46, 4.48. And then, you

02:05know,

02:05then we're going to work off of the economic data, the Fed and everything. 10-year yield had spiked up

02:11a

02:11few basis points toward the end of the conversation with Walsh. And then now it's come back down. So

02:18I think the question really is, is like, President Trump wants lower rates for housing. That's all,

02:23this is like, that's his main thing. He says it's all about rates. Kevin Walsh talked about housing

02:32twice, where policy is too restrictive for housing, but for everything else, fine. So the, I mean,

02:38the question now going out, like what, what can the White House and the Federal Reserve do at this

02:43point with a committee of governors who are clearly hawkish at this state?

02:50Well, and, you know, everyone's take from yesterday was that Kevin Walsh sounded hawkish

02:54for Kevin being, for, for being Kevin Walsh and, and people knowing that like, you know,

02:59he was put in here to lower rates. What is your take on that? Do you think he sounded hawkish?

03:03Kevin Walsh had to say what he had to say yesterday. I mean, what is he going to say?

03:07We don't want inflation to go down. It's the first Fed presser and he's already labeled as Trump's.

03:14So he has to take a firm stance. That might be the last Fed presser we see of Walsh.

03:20There is no guarantee that we have any more. So he did what, you know, I didn't see it as

03:28overly

03:28hawkish. I just saw him saying price stability. I mean, for, for me personally, I think Walsh wants

03:35to end the dual mandate. The people that are working with Kevin Walsh want to end the dual

03:39mandate. The problem is he doesn't have the authority to do that. Congress has to get involved.

03:45And I guarantee you, Democrats do not want, you know, the maximum employment mandate to go away.

03:52So there's going to be-

03:53So the dual mandate is inflation and employment, correct?

03:55Price stability and maximum employment, right? And there's, there's, there's a lot of people

04:00who just say you, you, the federal reserve should not have a dual mandate because they

04:03conflict with each other. Have a single mandate would be better. So that's going to be a fight

04:08that's eventually going to happen. But to my understanding, you need congressional approval

04:12for that to change. So I'm not looking for that to go away anytime soon. But I mean, for

04:19now, I thought knowing Kevin Walsh and his first Fed, he did, that was fine. I mean,

04:26I don't know if people thought he was supposed to sound dovish on his Fed press event. That probably

04:33would not have gone well. So people need to kind of like relax a lot of times, you know,

04:39because they see the 10-year yield and they saw stocks falling. I mean, part of the thing is that

04:43Kevin Walsh talked about, he doesn't want the market to respond to everything he says or everything

04:50like, you know, when Jerome Powell, you know, how many times have we come here and say Jerome Powell

04:54said this and all hell broke loose, right? He wants that to go away. And stock traders and bond traders

05:00like have to grow up and realize this, you guys are paid to do this. You know, you, you're, there's

05:06data to follow out here. In any case, we're here right now. Whatever spike that happened with a 10-year

05:13yield is basically down low. Oil prices are $75. We're back to economic data. The conflict is going

05:22to fade away as long as nothing crazy happens. The energy going up, hopefully over time, we get more

05:29oil, diesel prices come down. So we could remove that whole thing off the grid and we just move

05:34off of what was originally discussed about, you know, the one-time tariff inflation, and then that kind

05:40of subsides. And then right now, I think the best thing Kevin Warsh could do is maybe convince the

05:45hawks not to hike this year. And it gets, it does get a lot more interesting if there's no forward

05:53guidance. There's no, I mean, you're not, people are going to have to, it's going to be a learning

05:58curve how to interpret data a little bit more in a sophisticated way to make investment choices

06:05with the bond market. Yeah. I thought you brought this up yesterday, which I thought was really

06:10interesting is that like, you agree with the fact that like, you're like, good, no, no forward

06:14guidance could be better. Um, longer what? And that's just because like what you just said,

06:19then people can't, the market can't react to it. How many times have we said, what the hell was he

06:24saying? You know, I mean, I mean, I'm how many press events have I said, why did he answer it

06:32that way?

06:32Why did you know Jerome Powell or Janet Yellen or Ben Bernanke, whatever, you know, Greenspan didn't

06:41have these kinds of press events. My God, that would have been interesting. Um, markets short

06:47term can be very volatile on what a Fed statement is. So I have no problem with taking forward guidance

06:55away and killing the dot plots. I was not a fan of the dot plots. I mean, I, I wanted

07:00to set that thing

07:01on fire like a long time ago, but it's also that it's going to be a learning curve. You know,

07:08we

07:08have tasks for us now and you know, what kind of data we're going to, so this is the, the

07:13infancy of

07:14this whole regime change out there. I, of course I don't trust Kevin Warsh or the people working with

07:19him, like what they want to do. I think that's like some dungeon dragons, you know, 25 playbook stuff

07:25that they want. Uh, but Congress has the ability to, you know, uh, control their, their, their,

07:32their checks and balances. But for now, I think just focusing on economic data and, uh, not so much

07:39on a Fed statement, uh, that can move stuff around, uh, like crazy, but both up or down, you know,

07:45a lot, there, there are times where people, the bond market interprets it as super dovish,

07:49which wasn't the case. And then, uh, drone pal has to go talk to Nick Tamaris from the wall street

07:54journal and tell him to leak it out that that's not what we wanted. So, uh, Oh, everyone's grown

07:59ups. Everyone's, you know, uh, has their own models and stuff being, everyone's got to, you know, put

08:04their big boy pants on and learn how to trade with the market without a forward guidance. So, uh, it's

08:11going to be a learning curve. So I don't have a problem with that, uh, uh, per se. Okay. So,

08:17um,

08:17you know, we all know rate cuts are off the table. Uh, rate hikes are, are probable given,

08:24you know, depending on what happens the next little bit. And you wrote in your article that

08:27some of this has, you know, already been priced in what part has been priced in versus what should

08:32we expect? Like from a mortgage rate standpoint that we're going to see. No rate cuts is priced in.

08:38Um, one rate hike is already priced in with the 10 year yield and where mortgage rates are at.

08:45So we're kind of at the upper end, uh, of where mortgage rates can, can be in. If the economy

08:52gets stronger and inflation keeps on growing, uh, uh, that is something where you're going to get

08:59more rate hikes priced in, uh, that can send yields and, and fed policy to be, uh, I mean,

09:07if you just take the three cuts away from yesterday, last year, I think that's where people are looking

09:13at, uh, I don't see anybody really seriously saying anything more than that. So, uh, just remember

09:21the 10 year yield peaked at 5% in 2023. A lot of that was the fed went super hawkish

09:28because Powell

09:29said something crazy that didn't make any sense. And the markets took off with it. And then Austin

09:34Goolsbee was like, Oh, what's happening with the 10 year yield. This is why Warsh wants to take this

09:39away. You know, the fed governors sometimes say stuff that just gets interpreted and he just wants

09:46the markets to not react so much to that, to the data. Um, so a lot has priced in today,

09:54but also

09:54spreads are so much better. So mortgage rates are still, you know, uh, uh, under 6.75, uh, right now,

10:03they're probably, uh, they're probably going to a little bit lower, uh, uh, today. So the worst kind

10:08of is pricing, but if the labor data starts to pick up, I think that the concern is for other

10:14fed

10:14officials might've been if wage growth starts to pick up, but Kevin Warsh was one of these people

10:19that does not believe that wage growth is like inflationary. He kind of, this is where he, he,

10:26he goes into like a different phase. I might not agree with the, where monetary policy is too loose

10:31and it's, it's the wealth effect. Wealthy people are driving inflation. Inflation is a choice.

10:36If well, if people were less wealthy, then, you know, wages growing shouldn't be a problem.

10:41Um, and we've always talked about the labor supply, the federal reserve has this, you know,

10:47wage growth has to be below 3% because productivity is really at 1%. You get 2% inflation that

10:53way.

10:53Some people are questioning, are they going to change the 2% target? You know, are they going

10:58to move it up? That's something actually that I wrote in 2015 at the fed should raise its inflation

11:02targets. I mean, inflation going back to 1910 on average is like 3, 4, 3%. I digress. Um, in any

11:09case, we're going to have some choices that are going to be made going out in the future that are

11:14just going to be different than what Powell and Yellen and Bernanke, the last three, uh, three fed

11:21chairman, uh, have, uh, worked off of. So your upper range for this year, uh, was 6.75% for

11:28mortgage

11:28rates. Um, some things are already priced in. It's hard to know, but do you feel like that range

11:33is going to hold that range still sticks? I mean, I mean, think about this, that it wasn't just

11:39inflation breaking up higher. The labor data got better and we had a conflict and we didn't break

11:44over 6.75%. So that's just because of spreads, right? I, I, I made the spreads a really big part

11:51of my work the last three years for this reason that, uh, people might not understand how spreads

11:57work when it's contracting and it's can surprise a lot of people about, you know, it limits the ability

12:03for mortgage rates to really accelerate. Uh, so, so, so far it kind of, everything looks the same.

12:09I think the, the, the challenge for that forecast would be if the economy really starts to take off,

12:16uh, uh, and inflation and wages. And I don't know how many fed governors would feel comfortable if

12:22Americans start to make more money, because if people make more money, what's going to happen,

12:26Sarah? They, they live their lives. They buy houses. They do all this stuff. People are going to

12:31buy homes. They're going to have sex. They're going to have kids and that's living and that's

12:35inflationary, right? Which I don't agree with, with, with some, with one take, uh, Kevin Warsh

12:41said, inflation is a choice. No, inflation is life, right? If you do not have inflation, you're not

12:47living. You are a terrible economy that you have to have inflation. It's part of growing an economy.

12:53You cannot balance the supply and demand equilibrium to have zero inflation. That does not exist. That's

12:58a fantasy land by Dungeons and Dragons kids who never grew up, who worship a gold coin for some

13:04reason. In any case, um, what, what we see is the growth rate inflation needs to be tamed, right?

13:11And that's, that's why I think, you know, in the end, they would love to have it, the dual mandate

13:17gone and make it a single mandate and have the price stability out there. And, you know, I mean,

13:24for them, you know, a higher unemployment rate, I know a lot of people are going to debate this going

13:29out, but a higher unemployment rate, as long as the growth rate of inflation is, is tame and, uh,

13:36the economy is growing is acceptable. This is where I think the Congress, the Democrats would

13:40fight back because the knock is that the federal reserve, whenever the labor market gets tight,

13:45they start hiking rates to cool the labor market down to prevent wages. What do we say when we did

13:51this podcast, uh, a few weeks ago that businesses do not like a tight labor market? If you have a

13:58tight labor market, you have to pay people more money. You have to treat them better. You have to

14:03want to keep them in from leaving because if they have better choices and, uh, uh, they leave for a

14:08higher wage businesses don't operate. So that's, that to me is what, one of the reasons why I think

14:13they want to get rid of the dual mandate, uh, a slightly higher unemployment rate with more stable

14:20pricing, I believe is, is more acceptable to the Kevin Warsh and everybody he works with and the

14:25task force and the people in Congress and the 2025 plate, whatever it is, all those people, they

14:30would be completely fine with that. As long as the economy is growing and, uh, uh, um, uh, prices are

14:37stable. I guess I don't understand how your, um, upper level can hold if, if we seriously have three

14:43or four rate hikes coming, like no matter how good the, the, you would really, you would really need to

14:49have the economic data take off. I mean, do we really, I mean, if you are above 6.75 with

14:55where

14:55spreads are at, or if you have four rate hikes, it's, we don't have enough time in the year to

15:01have four rate hikes in 2026. Uh, so, uh, because the oil, oil prices have come down slot of the

15:08hawks

15:08that were maybe pricing in two rate hikes for this year might tame it down just a little bit.

15:15Right. And kind of Kevin worse talked about that, that, you know, they got their erasers ready

15:19because the conflict, you know, kind of just ended this week. And for two months straight,

15:25that was their talking point. You cannot tell the public. See, this is one of the reasons why

15:29Kevin weren't spots. These people shut up that you cannot tell people, Oh, it's all about if the,

15:34if the war continues, if the world, the wars continue, okay. The war is ending. Now what do you see?

15:38Everyone wants to react off of this, but because they put that out there, the market should already

15:44say, okay, well, the conflict's over now oil prices down. We should trade accordingly,

15:49right? You want to work off of the data rather than Beth hammock coming out of the labor market,

15:53super strong. And you know, the war is a problem. You know, we need to hike rate. So

15:58that's, that's why I don't change my forecast because once we go above it, then we, we talk about

16:05the variables that kid us there. And, and then because the majority of the year should stay

16:10within the range. And then what takes us above that, then we just focus on that. If that's

16:14going to accelerate or go lower, I don't do the quarterly, hello guys, six and a half mortgage

16:20rates. That's it. See you guys in three months. No, we do this day in and day out. I don't

16:26sleep.

16:26I talk about the time we go over all day. I kind of, so people can understand this daily moving

16:31because your life, your job does not stop. Uh, every single day, you got to wake up and price

16:36a mortgage every single day. You got to sit there and does your people want to sign the contract and

16:39lock the rates and everything. Okay. So why do economists get to do this off? Like talk about a

16:45quarter. We don't, we want to talk a day in and day out. Well, let's talk about some of the

16:49other

16:49economic data that we got this week. Um, so housing starts, um, purchase apps, like, what do you want

16:55to talk about? There's a lot going on. So I think one of the issues that we see, uh, why,

17:00you know,

17:01when, when Kevin Warsh says housing needs help. So what happened with housing start housing starts

17:05tanked, what's happened since rates have risen housing starts have gone nowhere. So I kind of

17:11take a shot at the yes of my backyard people. Everybody said it's all zoning. Everything is

17:15zoning. If we fix zoning, housing starts will, will, will miraculously grow. And I'm sitting here

17:21with like three years of data. I'm like, when are you guys going to get this? They are not the

17:26March

17:26of dimes, right? They are here to make money. We used to do like tax incentives and loan programs

17:34and late sixties and in the early eighties. And that got a multifamily. Like if you look at those

17:39multifamily chart construction things, they were pretty aggressive back then. And then when those

17:44benefits go out, Oh my God, they stopped. Why? So we have to come to a realization that zoning isn't

17:50going to solve everything. And vacancies are up, uh, uh, uh, for, uh, rentals. Uh, there is

17:58disinflation. Disinflation is good. There's some deflation in apartments, but we cannot assume that,

18:04Oh, well now they're going to keep on building and they might lose money every single month,

18:09but it doesn't matter because these are the holy angels of the universe. And these builders are here

18:14to lose money on their, uh, project. So there has to be a financial set of the math has the

18:19pencil

18:20itself out. Uh, that's one of the things that Trump has said it's about rates because when rates go

18:27lower, the math starts to make a little bit more sense. Uh, uh, and so when we wrote that housing

18:33starts article, what Kevin Warsh talked about policy is restrictive for housing, maybe not anything else.

18:41Housing starts at the early levels of COVID-19 recession and it's 2026 and they just had a big

18:47tank. So permits are not doing anything too terrible, but it's not going anywhere. And at what

18:54point at how many years do we have to do this? Because we have decades and decades of information

18:59that we just don't build supply first and then wait for demand to come in. So when vacancies are up,

19:06we see disinflation. The math has to make sense. So it has to be a private and public

19:11cooperation thing out there. And I think that's where Kevin Warsh and Trump are aligned about

19:17rates. Uh, all these rate cuts that have happened over the last few years has been beneficial for

19:24the economy. All right. It's also been beneficial in housing in terms of bringing the rate curve down

19:29and now spreads have improved, right? So we are, whatever we're having dealing with positive

19:34pending home sales data or existing, it's because policy is less restrictive. Uh, Kevin Warsh is not

19:40going to get what Trump wants. Trump wants 1% fed funds rate or whatever that that's not going to

19:44happen, but trying to figure out a way to have housing grow in terms of housing construction

19:51starts and permits and everything, uh, and existing home sales growing a little bit, then, then that's,

19:57that's, that's the, that's where Trump and, and, and Kevin Warsh are aligned into how they find a way

20:04to make that happen with rising inflation. It's going to be very problematic because it's a committee.

20:09The fed is still a committee. And right now there's just too many hawks, but six weeks from now,

20:14if oil is in the seventies for six weeks, things should change, right? If, if the Beth hammocks

20:21and the Austin Goolsby's and the Neil Kashkari's and the Lori Logan's were all authentic, if they were

20:27authentic human beings and they tell people it's the war that we're worried about, then their language

20:33should change and bond traders should adjust to that. And that's the, the world we have to live

20:40in now. It is going to be very interesting, uh, every day, every week, even, I mean, just continuing

20:45on 2026 because it has been crazy. Um, and I know we'll be watching it really closely. So Logan,

20:52thank you so much for being on. Thanks for, uh, going on solo yesterday. You did a great job.

20:56No, it's, it's, it's, it's good that I never have to worry about Rebecca, stop it. Stop it. No,

21:02we're not doing that. Rebecca, can you go back to like 10 minutes and take that out?

21:06That doesn't happen that often. It's just when you go off on a rant and I'm like, no,

21:10we're not doing that. But you don't realize people love Logan unleashed, right? You know,

21:16that's, that's the fun of it all. Oh yes. Well, uh, we'll get plenty of that. I appreciate you so

21:22much. Thanks for being on.

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