{"id":2378761,"date":"2024-12-11T07:35:00","date_gmt":"2024-12-11T12:35:00","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/rising-mortgage-rates-should-incentive-d-c-to-stop-spending\/"},"modified":"2024-12-11T07:37:20","modified_gmt":"2024-12-11T12:37:20","slug":"rising-mortgage-rates-should-incentive-d-c-to-stop-spending","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/rising-mortgage-rates-should-incentive-d-c-to-stop-spending\/","title":{"rendered":"Rising Mortgage Rates Should Incentive D.C. To Stop Spending"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Frising-mortgage-rates-should-incentive-d-c-to-stop-spending%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2378761&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>In \u2062this \u200dsummary, we explore the current economic situation under Donald Trump&#8217;s administration,\u2064 especially focusing on \u2064the impact of Federal Reserve interest rate cuts and their unexpected effect on mortgage rates. Despite \u2064the Fed&#8217;s decision to lower interest rates, which typically leads \u2064to a decline in mortgage rates, the contrary has\u2064 occurred:\u200b mortgage rates have risen significantly.\u200d This increase is attributed to \u2064bond traders&#8217; growing\u200c concerns about\u2064 inflation \u200cand <a href=\"https:\/\/amzn.to\/3YuVZYV\">long-term\u200c budget deficits<\/a>, \u200dhighlighting a disconnect between short-term and long-term economic \u2064indicators. With the federal government running a ample structural \u200ddeficit, Trump\u2063 and his team are cautioned to maintain fiscal discipline to ensure economic stability for American families. The piece suggests that the bond market may be reacting to concerns about the contry&#8217;s fiscal health as Trump&#8217;s reelection \u200cprospects emerged.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<div>\n<p>Both in his first term and since the November election, Donald Trump has pointed to a rising stock market as an endorsement of his policies. He would be wise to keep his eyes focused on another key economic indicator.<\/p>\n<p>As the Federal Reserve started a round of interest rate reductions, mortgage rates rose again over the past two months. Coming as those locked out of ultra-low rates during the Covid panic face serious obstacles to purchasing the home of their dreams, the development should emphasize to Trump and his team the importance of fiscal discipline in maintaining economic stability for American families.<\/p>\n<h2>Interest Rate Diversion<\/h2>\n<p>In mid-September, the Federal Reserve <a href=\"https:\/\/www.cnbc.com\/2024\/09\/18\/fed-cuts-rates-september-2024-.html?msockid=13b3c291829f61711db3d019869f6fb7\" target=\"_blank\" rel=\"noreferrer noopener\">cut interest rates<\/a> by half a percentage point. It followed that development with another quarter-point cut immediately after the November elections. One might think mortgage rates would decline in concert with the Fed&rsquo;s actions, but the opposite happened. While the Fed cut rates by three-quarters of a percentage point, 30-year mortgage rates <a href=\"https:\/\/ycharts.com\/indicators\/30_year_mortgage_rate\" target=\"_blank\" rel=\"noreferrer noopener\">rose by the exact same amount<\/a>, going from an average of 6.09 percent the week of Sept. 19 to 6.84 percent the week of Nov. 21.&nbsp;<\/p>\n<p>The divergence comes because, while the Federal Reserve establishes short-term interest rates, mortgages are more closely associated with the rate on the 10-year Treasury note. And in recent weeks, bond traders have <a href=\"https:\/\/www.msn.com\/en-us\/money\/markets\/inflation-worries-come-back-to-haunt-bond-strategists-after-trump-victory-reuters-poll\/ar-AA1u0J3c?ocid=msedgntp&amp;pc=DCTS&amp;cvid=13ee066ff04743868270f2607f136b98&amp;ei=68\" target=\"_blank\" rel=\"noreferrer noopener\">increased their worries<\/a> about <a href=\"https:\/\/thefederalist.com\/2024\/11\/04\/trumps-economic-policies-are-far-superior-to-harris-but-could-still-be-better\/\" target=\"_blank\" rel=\"noreferrer noopener\">inflation<\/a> and long-term budget deficits.&nbsp;<\/p>\n<h2><strong>Bond Market Vigilantes?<\/strong><\/h2>\n<p>It is of course difficult to divine a single factor behind the moves of myriad participants in a marketplace. And the rise in bond yields, and mortgage rates, occurred before the election &mdash; but began in October, as a Trump victory became more likely. So it&rsquo;s not entirely unrealistic to wonder whether the nation&rsquo;s fiscal situation has attracted the focus of the bond market.<\/p>\n<p>Recall that the federal government has a structural deficit approaching <a href=\"https:\/\/thefederalist.com\/2024\/10\/21\/washington-reined-in-2024-spending-by-only-burning-through-1-9-trillion-more-than-it-brought-in\/\" target=\"_blank\" rel=\"noreferrer noopener\">$2 trillion per year<\/a>, or over 6 percent of the country&rsquo;s gross domestic product. Recall too that this sizable structural deficit &mdash; one of the largest ever run in peacetime &mdash; comes <em>before<\/em> Congress considers extensions of the Tax Cuts and Jobs Act, major portions of which expire at the end of 2025. Lawmakers seem unwilling to let go of the nation&rsquo;s credit card, but at some point, bond market traders in the United States and elsewhere will start questioning the federal government&rsquo;s ability to pay back all of this borrowing.<\/p>\n<h2><strong>American Dream or American Nightmare?<\/strong><\/h2>\n<p>Therein lies one of the best arguments for <a href=\"https:\/\/thefederalist.com\/2024\/08\/19\/if-republicans-want-to-extend-trumps-tax-cuts-they-should-cut-spending-to-do-it\/\" target=\"_blank\" rel=\"noreferrer noopener\">paying for tax relief via spending reductions<\/a> and for cutting federal spending generally. Returning to fiscal responsibility will provide significant benefits to American families, via things like lower mortgage rates, while continued reckless spending by Washington could cripple the ability of the next generation to purchase their slice of the American dream.<\/p>\n<p>Families who couldn&rsquo;t capitalize on <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/secy-yellen-dismissed-concerns-of-double-digit-inflation\/\" title=\"Secy. Yellen dismissed concerns of double-digit inflation\">ultra-low interest rates<\/a> during Covid face an uphill climb to buy their own home. House prices skyrocketed through the Covid years, and now <a href=\"https:\/\/thefederalist.com\/2024\/08\/26\/the-money-printing-that-made-millennials-wealthy-can-bankrupt-them-too\/\" target=\"_blank\" rel=\"noreferrer noopener\">most households<\/a> are locked into their current mortgage. That is, because the Federal Reserve artificially lowered rates by quantitative easing (i.e., printing money) during the Covid panic, people don&rsquo;t want to move houses and give up a 3 percent mortgage rate for a mortgage charging more than double that.<\/p>\n<p>This &ldquo;boom-and-bust&rdquo; interest rate cycle <a href=\"https:\/\/thefederalist.com\/2021\/11\/17\/how-the-federal-reserve-keeps-stoking-inflation\/\" target=\"_blank\" rel=\"noreferrer noopener\">sparked by the Federal Reserve<\/a> &mdash; lowering rates through quantitative easing, only to have to raise them sharply when inflation reared its ugly head &mdash; has jeopardized housing affordability for those seeking to buy their first home. Higher rates will <a href=\"https:\/\/thefederalist.com\/2023\/11\/03\/theres-no-soft-landing-waiting-for-the-millions-of-families-suffering-from-bidenomics\/\" target=\"_blank\" rel=\"noreferrer noopener\">cost families<\/a> hundreds, if not thousands, of additional dollars in interest payments every month.<\/p>\n<h2><strong>Fiscal Responsibility Can Help Lower Rates<\/strong><\/h2>\n<p>The solution to this quandary should not come via more market interventions by the Federal Reserve &mdash; <a href=\"https:\/\/thefederalist.com\/2023\/11\/28\/why-the-federal-reserve-should-keep-its-grubby-mitts-off-the-mortgage-market\/\" target=\"_blank\" rel=\"noreferrer noopener\">enough of that already<\/a>, please. Instead, lawmakers can help to <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/federal-reserve-holds-steady-on-interest-rates-amidst-mixed-economic-signals\/\" title=\"Fed keeps interest rates unchanged despite mixed economic signals\">lower long-term interest rates<\/a>, the rates that affect mortgages, by getting the country&rsquo;s fiscal house in order and lowering our structural deficit.<\/p>\n<p>Washington has proven itself reluctant to act for far too long. But focusing on mortgage rates &mdash; how they have risen significantly in the past few years and how fiscal discipline could help to lower them &mdash; would provide a tangible benefit for American families and motivation for lawmakers to stick to their promises for once. The alternative, in the form of a bond market crash forcing Congress to make immediate budgetary cuts, would be too catastrophic to contemplate.<\/p>\n<hr>\n<div>\n<p>      Chris Jacobs is founder and CEO of Juniper Research Group and author of the book &#8220;<a href=\"https:\/\/www.amazon.com\/dp\/1645720020\">The Case Against Single Payer<\/a>.&#8221; He is on Twitter: <a href=\"http:\/\/twitter.com\/chrisjacobsHC\">@chrisjacobsHC<\/a>.<\/p>\n<\/div><\/div>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Trump should focus on mortgage rates, not just stocks<\/p>\n","protected":false},"author":521,"featured_media":2378762,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/12\/United-States-Flag-and-Dollar-Bills.jpg","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[46559,13123,10680,32412,37637],"class_list":["post-2378761","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-d-c-policy","tag-economics","tag-finance","tag-government-spending","tag-mortgage-rates"],"fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/12\/United-States-Flag-and-Dollar-Bills.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2378761","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/521"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2378761"}],"version-history":[{"count":3,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2378761\/revisions"}],"predecessor-version":[{"id":2378765,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2378761\/revisions\/2378765"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2378762"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2378761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2378761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2378761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}