Trump’s Fed Battle Risks Backfiring on Housing

​Powell Says Housing Isn’t the Fed’s Fault
Fed Chair Jerome Powell insists the central bank isn’t to blame for America’s housing affordability crisis. Mortgage rates, he argues, are set by markets, not by the Fed, and the real culprit is the country’s long-standing shortage of homes.

Trump Turns Up the Heat
President Trump isn’t buying it. Since taking office in January, he’s repeatedly slammed Powell and the Fed for keeping rates high and “choking out” housing. His latest move? An effort to oust Fed Governor Lisa Cook, a bold attempt to reshape the central bank in line with his agenda.

The Independence Problem
A Fed stacked with Trump appointees might slash rates — but that doesn’t guarantee cheaper mortgages. In fact, investors could push long-term yields higher if they believe the Fed has lost independence. That paradox means mortgage rates could climb even as the Fed cuts, leaving housing even less affordable.

Allegations Fuel the Fire
The effort to remove Cook was spearheaded by Bill Pulte, head of the Federal Housing Finance Agency and heir to a homebuilding empire. He accused Cook of misrepresenting property details on mortgage applications, sparking a lawsuit as she fights to keep her seat.

Housing Crisis Deepens
Home sales are already stuck at near 30-year lows. Mortgage rates above 6.5% to 7% have kept affordability at rock bottom, while a decade of underbuilding left supply far behind demand. Trump’s push to lower borrowing costs could trigger unintended consequences: another homebuying frenzy that pushes prices even higher, just like during the pandemic-era rate cuts.

The Fed’s Dilemma
The central bank faces a balancing act. The labor market is weakening — normally a reason to cut rates — but inflation is still too high. Cutting too aggressively could reignite inflation, drive up bond yields, and ultimately worsen the housing squeeze.

The Bottom Line
​Trump wants lower mortgage rates, but undermining Fed independence could backfire. Instead of relief, the housing market might face another cycle of rising costs, deepening the very crisis his policies aim to fix.