One of the most hotly debated economic questions right now is this: If Donald Trump returns to the White House, will he push to lower interest rates again? The answer could have a significant impact on everything from inflation and consumer spending to—most notably—the housing market.
For real estate buyers, interest rates are often the single most important factor influencing affordability, purchasing power, and long-term investment potential. With mortgage rates recently hovering between 6% and 7% in early 2025, even a small shift downward could open up opportunities for millions of Americans hoping to buy a home. But with Trump’s bold and often unorthodox economic strategies, what exactly could we expect?
In this article, we break down the potential for lower interest rates under a Trump administration and what that might mean for today’s and tomorrow’s homebuyers.
A Look Back: Trump and the Federal Reserve
To understand what might happen, it’s helpful to look back at how Trump interacted with the Federal Reserve (the Fed) during his first term.
From 2017 to 2021, Trump repeatedly called on the Fed to lower interest rates. He publicly criticized then-Fed Chair Jerome Powell for being too slow to cut rates, particularly in 2018 and 2019. Trump’s view was that lower rates would:
- Stimulate borrowing and consumer spending
- Boost the stock market
- Weaken the dollar to benefit U.S. exports
- Drive economic growth
By mid-2019, the Fed did cut rates in response to trade tensions and global economic uncertainty—and continued to cut through 2020 as the COVID-19 pandemic began. By the end of his term, rates had fallen to near zero.
So it’s safe to say: If Trump is re-elected, we can expect a renewed push to lower rates, especially if inflation appears to be under control.
The Federal Reserve Is Independent… But Not Immune to Pressure
The Fed is supposed to operate independently of the White House to avoid political interference in monetary policy. However, presidential influence is real—especially when a leader is as vocal and aggressive as Trump has historically been.
In a second term, Trump may:
- Nominate Fed governors who align with his views
- Publicly pressure the Fed through social media and speeches
- Use political tools to nudge the central bank toward rate cuts
While the Fed under Chair Powell has shown resistance to pressure, the makeup of the Board of Governors can shift, and new appointments could mean a more dovish (rate-cutting) bias over time.
Would Lower Rates Actually Happen?
A Trump-led call for lower interest rates could happen—but only if inflation is under control. That’s the key variable.
As of early 2025, inflation has cooled from its 2022 highs but still remains above the Fed’s 2% target. If inflation begins to decline significantly in late 2025 or 2026, a Trump administration might:
- Push the Fed to aggressively reduce rates to pre-2022 levels
- Aim to reignite housing demand and economic growth
- Promote rate cuts as a political win for the middle class and real estate market
However, if inflation remains sticky, the Fed may be reluctant to lower rates quickly—even under political pressure.
What Would Lower Interest Rates Mean for Homebuyers?
If Trump’s influence leads to falling interest rates, here’s what it could mean for potential homebuyers:
1. Improved Affordability
A drop in interest rates can significantly reduce monthly mortgage payments.
For example:
- A $400,000 mortgage at 7% = ~$2,661/month
- That same mortgage at 5% = ~$2,147/month
That’s a savings of over $500 per month—or more than $6,000 per year.
Lower rates allow buyers to afford more home for the same monthly budget, which is especially crucial for first-time buyers and middle-income households.
2. Increased Buyer Competition
As rates fall, demand tends to spike. People who were previously priced out re-enter the market, and fence-sitters jump in before rates rise again. That can lead to:
- Multiple-offer scenarios
- Faster home sales
- Higher home prices
Ironically, while lower rates help buyers afford more, the increased demand can drive up prices, potentially neutralizing the benefit—especially in tight inventory markets.
3. Refinancing Opportunities
If you already own a home with a mortgage locked in at a high rate (6–8%), a drop in rates could create a golden opportunity to refinance. This would allow you to:
- Lower your monthly payments
- Potentially shorten your loan term
- Free up cash for investments, renovations, or savings
A Trump administration that ushers in lower rates could set off a new wave of refinancing activity, similar to the post-2008 and 2020 markets.
4. Investment Growth and Real Estate Wealth Building
For real estate investors, lower interest rates mean:
- Better cash flow on rental properties
- Higher ROI on leveraged deals
- More aggressive acquisitions
This could lead to a rise in investor activity, particularly in markets with strong job growth and rental demand. For buyers, this means more competition for entry-level homes and multifamily properties.
5. Potential Long-Term Risk: Housing Bubble?
One major risk of an aggressive rate-cutting campaign is overheating the market. If buyers flood into the market chasing low rates and home prices surge unchecked, we could see:
- Overvaluation of homes
- Risky lending practices re-emerging
- A repeat of the early 2000s scenario
This is why any Trump-driven call for lower rates must be balanced with careful market regulation and oversight.
What Should Buyers Do Now?
Whether Trump wins or not, mortgage rates will remain a key driver of real estate decisions in 2025 and beyond. Here’s how to stay ahead:
✅ Watch Inflation Trends
The Fed will only cut rates if inflation comes under control. Follow CPI reports and Federal Reserve updates.
✅ Get Pre-Approved Early
Even if rates fall, the best-prepared buyers will win in a competitive market. Pre-approvals lock in rates and demonstrate credibility to sellers.
✅ Buy Based on Affordability, Not Speculation
Don’t try to time the market perfectly. If the numbers make sense today, and you’re financially stable, now might still be a great time to buy—regardless of political shifts.
✅ Stay Flexible
If rates drop, refinance. If they rise, be glad you locked in early. Either way, a long-term real estate strategy beats short-term hype.
It’s highly likely that we’ll see renewed pressure on the Fed to lower interest rates—especially if inflation cools. For homebuyers, that could open the door to more affordable mortgages, increased competition, and renewed opportunities for wealth-building through real estate.
But while lower rates sound great on paper, they also come with challenges—higher home prices, increased investor competition, and potential long-term instability. Whether you’re a first-time buyer or a seasoned investor, the smartest move in 2025 is to stay informed, plan strategically, and stay prepared for multiple scenarios.
Because no matter who’s in office, the best buyers are the ones who think long-term.
