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2025-07-31 03:20:47
On Wednesday afternoon, Federal Reserve Chairman Powell was asked why Americans endure mortgage rates around 7%. He responded that the Fed cannot control the direction of mortgage rates. While the federal funds rate directly affects some savings and borrowing rates, mortgage rates are more closely correlated with the 10-year Treasury yield. US President Trump stated on his social media platform on Wednesday that the Federal Reserve should "enable people to buy homes and refinance." However, even if the Fed cuts interest rates, it will not be a panacea for the housing market's problems. Since the subprime mortgage crisis, the US has been plagued by a chronic housing shortage, rising construction material costs (most recently due to Trump's imposition of high tariffs on goods such as lumber and metal), and the forced eviction of foreign workers who constitute the industry's critical workforce, making the housing inventory shortage even more severe. It is also worth noting that after the Fed began cutting interest rates last year, mortgage rates have risen instead of falling. (Refinitiv)
