Mortgage rate volatility returns ahead of Trump’s Davos speech

President Donald Trump is set to speak Wednesday at the World Economic Forum in Davos, Switzerland, and it’s already proving to be a catalyst for mortgage rates.

Mortgage News Daily reported on Tuesday that 30-year fixed rates averaged 6.21% — up 14 basis points from Friday.

HousingWire’s Mortgage Rates Center, which tracks locked loans across all borrower credit profiles, showed Tuesday that 30-year conforming rates have declined by 6 bps in the past week to average 6.20%. Rates for 30-year jumbo loans dropped by 11 bps to 6.15% and rates for 30-year Federal Housing Administration (FHA) loans averaged 6.04%, down 2 bps.

“Today is a good day to see if the White House’s mortgage-backed security purchase game plan works,” said Logan Mohtashami, HousingWire’s lead analyst. “With the 10-year yield at 6.28% today, we would normally be over 6.30% with mortgage rates now.

“In 2026, the spreads are lower to start the year. We ended Friday at 6.07%, so if rates are under 6.30%, the buying helped limit the damage from bond yield action with all the crazy headlines and market reaction today.”

Jeff DerGurahian, chief investment officer and head economist at loanDepot, said Monday that the past week has provided “an unusually high level of noise” which has pushed Treasury rates and mortgage rates higher. He also believes the chances of the Federal Reserve continuing its recent rate-cutting campaign next week have been “fully wiped out,” with “June emerging as the earliest realistic window.”

“All eyes are on the Davos Economic Forum this week, where President Trump is expected to announce his selection for Fed Chair and unveil his broader housing plans,” DerGurahian said. “This will likely include additional details on his proposed 401(k) down-payment plan, which we’re eager to learn as it will help us to determine the impact it could have on housing affordability.

“Discussion around Greenland is also expected to dominate the Forum, as it has already triggered a bit of risk of selling off long term U.S. debt in the futures market this morning.”

Keefe, Bruyette & Woods (KBW) analysts also weighed in on the impacts to housing policy that are expected to emerge from the Davos forum. They referred specifically to affordability challenges driven by supply-and-demand imbalance, high home price appreciation over the past few years and higher mortgage rates.

“We expect measures to primarily focus on the borrower because the federal government has limited ability to increase housing supply,” the KBW analysts wrote in a note to investors on Monday.

“So, in addition to the announcements that have already been made, market expectations include potential reductions in FHA premiums and GSE guarantee fees. While we think premium cuts are possible, there is a risk that market expectations for lower mortgage rates could be too high.”

Fed policy discussions

In the past week, at least three Federal Reserve officials have spoken publicly on the state of the U.S. economy and the potential direction of interest rates. This also coincides with reports that Kevin Hassett, who had been the frontrunner as the next Fed chair, is likely to stay in his current post as director of the White House National Economic Council.

Kansas City Fed President Jeffrey Schmid — who has been a supporter of more restrictive rate policy — said that some key developments from 2025 are carrying over into 2026. These include the effects of higher tariffs on consumer prices, as well as the artificial intelligence boom and its potential to reshape employment.

Schmid also offered his reasoning for opposing the past two Fed rate cuts.

“First, inflation remains too high. Second, I believe that cutting rates could disproportionately harm the inflation side of our mandate without providing much benefit to the employment side. And third, I don’t think that monetary policy is currently very restrictive,” he said Thursday during a meeting in Kansas City.

Michelle Bowman, the Fed’s vice chair for supervision and a reported candidate for the Fed chair position, said Friday at an event in Massachusetts that the federal funds rate (currently at a range of 3.5% to 3.75%) is now closer to what she’d label as neutral.

“Although inflation remained a concern for me early in the year, my assessment shifted as I began to see clearer signs of slowing economic growth and increasing fragility in the labor market,” Bowman said. “I became more confident that the inflationary effects of tariffs would largely be a one-off, as I observed growing evidence that businesses were less able to pass through higher costs to consumers.

“I saw this as a sign of weakness in demand and consistent with the cooling labor market. These developments led me to place increasing weight on risks to employment and to signal a shift in my balance of risks in June, after which I dissented at the July meeting favoring a 25-basis point reduction to reflect this shift.”

During a speech in Florida on Friday, Fed Vice Chair Philip Jefferson offered details on the central bank’s recent shift in securities holdings. He said that the Fed reduced the size of its balance sheet by roughly $2.2 trillion from early 2022 to late 2025. The end of the Fed’s quantitative tightening policy could have just as much influence over lower mortgage rates as reductions to benchmark interest rates.

“It is important to note that while ending the asset runoff slows down the decline in reserves, it does not completely halt this process,” Jefferson said. “… Consequently, to maintain an ample reserves level — a key operational objective of our current monetary policy implementation framework — the FOMC must expand its balance sheet commensurately with the public’s demand for its liabilities.

“This necessitates a nuanced and forward-looking approach to balance sheet management that considers both cyclical and structural factors affecting the demand for and supply of reserves.”