The Mortgage Rate Myth: Why Cheap Money Won’t Fix Housing Affordability

President Trump’s insistence on lowering interest rates serves only the ever-growing spending state. Lower interest rates may relieve some price pressure in the housing market, but printing money is only going to make things worse in the long run.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

On Tuesday, the yield on the 10-year Treasury surged nearly 10 basis points in a few hours, rising above 4.49 percent. The rising yield came after the release of new price-inflation data showing that CPI growth had hit a five-month high and remained well above the Federal Reserve’s two-percent target for price inflation. Rising yields often indicate that bond investors believe price inflation will continue to grow, so it was probably no coincidence that bond yields—especially on longer-term bonds—jumped following the report’s release.

Whatever the reason behind the rising yield, this is bad news for those who were looking for a good reason to believe that mortgage rates will significantly fall again soon. Mortgages for single-family homes closely follow the 10-year yield, and, as the 10-year yield has risen in recent years, the average 30-year mortgage more than doubled. Ity rose from under three percent in mid 2021 to above seven percent by late 2023. It has remained above six percent ever since.