Senate Confirms Warsh as Fed Chair; Mortgage Rate Holds at 6.37%

The Data

6.37%.

That is the Freddie Mac 30-year fixed-rate mortgage for the week ending May 7, the most recent PMMS print, up 7 basis points from 6.30% the prior week. The rate sits 199 basis points above the 10-year Treasury at 4.38% — a spread that has held in a tight band since the 5-week low at 6.23% in late April.

The catalyst today is policy, not price. The Senate confirmed Kevin Warsh on Wednesday as the 17th chair of the Federal Reserve, succeeding Jerome Powell whose term as chair ends May 15. Warsh, a former Fed governor during the 2008 financial crisis, was confirmed as a board member Tuesday before the chair vote.

The Context

Powell's last Federal Open Market Committee meeting two weeks ago held the benchmark federal funds rate steady at a target range of 3.50% to 3.75% — the third consecutive pause. The vote was 8-1, with Stephen Miran dissenting in favor of a 25-basis-point cut. Three other officials backed the hold but objected to "easing bias" language signaling a coming cut.

The mortgage industry response was attributed and consistent. Joe Panebianco, CEO of AnnieMac Home Mortgage, told HousingWire that "the mortgage industry depends on a healthy and predictable rate environment" and that Warsh would have to "gain consensus amongst a Fed divided on inflation concerns." Bob Broeksmit of the Mortgage Bankers Association flagged Basel III capital weights on mortgage servicing assets as a priority. Stan Holland of Atlantic Bay Mortgage Group said the long end of the curve — not short rates — drives mortgage payments for homebuyers.

Also Moving

• Miran exits as governor as Warsh is sworn in. Miran had pushed for cuts since replacing Adriana Kugler last year (HousingWire).
• DOJ closed its investigation into Powell's testimony on the $2 billion Fed headquarters renovation, clearing a political obstacle ahead of the chair vote. The case was referred to the Fed's inspector general for internal review.
• Powell remains on the board as a governor after his chair term ends May 15, keeping a low profile "for a period of time to be determined."

What to Watch

Three observable signals over the next 45 days:

1. Thursday May 14 — the next Freddie Mac PMMS print. Whether the 30-year breaks back below 6.30% or holds in the 6.37-6.50% band sets the tone for Warsh's first week.
2. Wednesday May 28 — the next FOMC summary release. Warsh's first meeting as chair will test whether the "easing bias" language stays, gets sharpened, or gets pulled.
3. The 10-year Treasury auction calendar. A move toward 4.00% would compress the mortgage spread; a move toward 4.60% widens it.

Data sources: FRED (MORTGAGE30US, DGS10, FEDFUNDS), HousingWire, Mortgage Bankers Association.