Mortgage Rates Rise Despite Trump's Calls for Lower Interest Rates

The Federal Reserve raised its benchmark interest rate to 3.9% on Wednesday, but President Donald Trump has once again called for lower rates. However, economists say that broader economic trends are driving up longer-term borrowing costs, making it unlikely for mortgage rates to fall anytime soon.

According to Joe Brusuelas, chief economist at RSM, the shift from a weak consumer and business demand economy to one with healthy spending colliding with supply shocks and bottlenecks has led to higher interest rates. This return to pre-financial crisis levels is driven by factors such as AI buildout struggles with insufficient computer chip supplies, electronic equipment, and workers.

The additional borrowing for data center construction and government budget deficits have also contributed to higher long-term interest rates on government bonds. The yield on the 10-year Treasury bond has topped 5% this year for the first time since 2023, even before the Fed raised its benchmark rate.