Fed Week Turned Real Housewives: Who Gon' Check Powell?

Fed Week turned Real Housewives of the Central Bank. President Trump has loudly demanded Jerome Powell cut rates—then backtracked—then doubled down again. Classic chaos. This week Powell’s announcement that the Central Bank would hold rates steady, while still planning to cut twice before the end of the year, spurred commentary from FHFA Director Bill Pulte. I’ll catch you up on all the juicy drama and I won’t hold any punches because “who gon check me boo?” 

What is FHFA?

Bill Pulte oversees Fannie Mae and Freddie Mac. He’s a big deal over here in the mortgage space. Fannie and Freddie are government-sponsored enterprises. They don’t lend money directly to homebuyers. Instead, they buy mortgages from banks like mine, bundle them into mortgage-backed securities, and sell them to investors. This system keeps mortgage money flowing and helps set the rules for the loans we offer…like how long you have to be self-employed before we can use your income, or what counts as an acceptable source of down payment funds.

Pulte criticized the central bank’s choice to hold rates steady stating that these higher rates are causing the affordability crisis. He made multiple posts, as well as TV appearances, calling for Powell to “cut rates or quit.”

Will rate cuts solve all of our problems? 

I sound like a broken record, unless you’re new here, but the Fed Funds rate doesn’t directly translate to mortgage interest rates. The Fed Funds rate is the short-term lending rate, so it directly impacts HELOCs and credit cards. The Fed’s policy for sure impacts investor behavior and demand for mortgage-backed securities. It is important to understand this because Fed rate cut of 25bps will not directly lower mortgage interest rates by a quarter of point. In fact, on some Fed rate cuts – we’ve seen mortgage rates go up. Behind every 30-year fixed loan is an investor deciding whether that mortgage is a good bet. If those investors pull back, rates go up. That’s what we’re seeing right now, and it’s part of why affordability feels so tight even in a “softer” market. 

Another important part of this whole affordability crisis is inventory. While Pulte thinks higher rates are hurting inventory by keeping homeowner’s locked into golden handcuffs, we also know what the market was like when interest rates are lower. There is a lot more buyer demand and nowhere near an equivalent increase in the supply of homes. So it very quickly becomes a seller’s market and home prices start re-accelerating. 

This would effectively end this short window of a buyer’s market we’ve been experiencing. Rates may drop this year, but that won’t make homes more affordable, and this is important for buyers to understand. The best time to buy is right before everyone else jumps back into the market.

Should Powell step down? 

This might be above my paygrade, as you know – I’m only a mortgage lender after all. But you also know, I have opinions. It kind of irks me when folks who wouldn’t pass an economics 101 course call Powell or the other central bank members idiots. Plus, call me crazy, but I do like the various systems of checks and balances our country was founded upon. The Federal Reserve is not one of the three arms of government but it was designed to be independent of political pressure. 

Powell’s playing the long game on inflation. And honestly, that’s probably the right call. Housing affordability matters, and so does the cost of literally everything else. This isn’t just a mortgage issue. It’s a systemic one. Watch this space. What comes next will shape not just the rest of 2025, but the decade ahead.