Last weekend, wagering sites nearly doubled their expectations for the Trump-aligned election of National Economic Council Director Kevin Hassett as the new Federal Reserve chairman.
The stakes for real estate investors could not be more impactful, as the Federal Reserve chair is effectively the person who helps determine U.S. mortgage rates and, subsequently, market demand. Jerome Powell’s term is scheduled to end in May 2026, with the incoming chairman expected to take a decisively dovish position on rates.
The expectation is that the incoming chairman will align with the Trump administration on (potentially dramatically) lower rates to boost the economy, provide affordability relief, and unlock housing. A shift to a low-rate Fed policy will make mortgage money cheaper, directly increasing buyer demand, unlocking inventory, and potentially launching a new cycle of real estate appreciation.
How a Dovish Chair Makes Borrowing Cheaper
Short-term rate action
Fed rate cuts are the most visible action. The new chair will push for lower short-term lending rates for banks, known as the federal funds rate—possibly via larger-than-anticipated cuts (0.5%-0.75% per meeting), or done more rapidly than market expectations.
Market signaling
The chair’s words can matter more than actions. If in the first Fed meetings, Hassett signals to lenders that long-term rates are coming down, expect lenders to adjust accordingly. This weekend, we already saw the 10-year Treasury touch 4%.
The money supply (boosting liquidity) ending quantitative tightening (QT)
Even under Powell’s tenure, the Fed is scheduled to stop tightening this December. This has a direct impact on mortgage bonds and mortgage rates (the 10-Year Treasury…