Mortgage Rates Today, August 26, 2025: Focus Switches to an Attempt to Fire a Top Fed Official

The bigger picture

Might the Cook case affect mortgage rates?

"President Trump said on Monday that he was taking the extraordinary step of removing Lisa Cook from the Board of Governors of the Federal Reserve," reports The New York Times. We will have to see how investors react to the news to gauge its likely impact on markets and mortgage rates.

The White House alleges that Cook committed mortgage fraud by applying for two mortgages while claiming both homes were her primary residence. The president recently ordered an investigation into the case, but there are no indications that inquiries have been completed.

The relevant law says that a Fed board member shall serve his or her term "unless sooner removed for cause by the President." The question is whether sufficient cause can yet (or ever) be proved.

The New York Times described the action as "a legally dubious maneuver that could undermine the independence of the nation’s central bank." The Wall Street Journal remarked, " ... it is legally unclear whether the president possesses such power." And Cook's attorney, Abbe David Lowell, said, "We will take whatever actions are needed to prevent this attempted illegal action."

We can't yet be sure whether markets will regard the attempted firing as an isolated incident or within the context of a sustained battle between the government and the Fed over the speed at which the central bank is reducing general interest rates. Fed Chair Jerome Powell has been frequently insulted and was threatened with removal from office.

MarketWatch quoted Julia Coronado, a former Fed staffer and founder of research firm MacroPolicy Perspectives: "Trump’s firing is not about Lisa Cook, but about Trump trying to usurp control of monetary policy through targeting members of a board structured to make the institution resistant to political influence."

"He is trying to break that structure down,” Coronado told MarketWatch. “It is extraordinarily dangerous to the financial stability of the United States and global capital markets."

Generally, investors value the independence of the Fed, which they trust to manage the nation's long-term prosperity more effectively than politicians, whose interests tend to revolve around short-term election cycles. Will they see yesterday's move as Coronado does? Or will they regard it as a minor distraction? We'll find out when markets open later this morning.

However, foreign markets are already taking the attempted firing seriously. "The news has spooked markets, with the US dollar and long-dated Treasuries both falling on Tuesday. The US dollar index, which tracks the greenback against a basket of other major currencies, fell by 0.1%," reports The Guardian, a newspaper based in London, England. If the same happens here later, mortgage rates might rise.

What else is on this week's agenda?

We're due a couple of economic reports in the next few days that might move mortgage rates modestly or even moderately. But we'll likely have to wait for this Friday's big inflation report for a serious chance of a significant shift.

An even greater chance of a big change arises the following Friday (Sep. 5) when the August jobs report is due. Markets are currently closely focused on inflation and employment data. And Fridays are a favorite day for some of those.

In theory, any economic report has the potential to affect mortgage rates significantly. But, in practice, most rarely move them at all, while a handful account for nearly all the changes.

One of the reports that this week could move mortgage rates modestly or moderately is due today. It's the August consumer confidence index. Read on for more details.

What's coming up?

Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning tariffs and deficit funding are especially influential at the moment.

Here is what the economics team at Comerica Bank is expecting from this week's reports:

"GDP in the second quarter of 2025 will probably be revised higher in the second estimate due to upward revisions to consumer spending. Personal incomes and spending are forecast to have risen at a solid pace in July. The Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation gauge—likely rose modestly on soft food and gasoline prices, while the core PCE index, which excludes those items, likely accelerated. New home sales likely declined in July and home price indices probably fell in June and rose slower in year-over-year terms. Consumer confidence probably eased in August, although households’ short- and long-term inflation expectations remained elevated."

Mortgage rates today

Today's MarketWatch economic calendar contains three economic reports. However, the one most likely to affect mortgage rates is the consumer confidence index. That's expected to fall to 96.5 from 97.2 in July.

Wall Street will pay particularly close attention to the index's analysis of consumers' expectations for inflation. There's a concern that, if consumers become convinced that higher inflation is coming, they'll demand higher wages to compensate. And that could fuel a 1970s-style inflationary spiral in which wages chase prices and prices chase wages.

For the sake of completeness, here are today's other two reports:

• July durable goods orders — Markets expect these to drop -4.0%, better than June's -9.4%
• June S&P Case-Shiller home price index (20 cities) — Markets expect home price rises to slow to 2.3%, down from 2.8% in May

Typically, mortgage rates fall on worse-than-expected data and rise on better-than-expected numbers.