Trump promised 2% mortgages on the campaign trail last September.
Let's be clear: the President doesn't set mortgage rates. The Fed doesn't directly set mortgage rates either. The bond market does.
30-year fixed mortgages track the 10-year Treasury yield, plus a spread for credit risk and prepayment risk. That spread has averaged 1.5-2% historically.
For mortgages to hit 2%, you'd need 10-year yields near zero. That only happens during severe recessions or deflationary crises — think 2020 pandemic panic or 2008 financial collapse.
Right now, 10-year yields are around 4.5%. Inflation is sticky. The Fed is barely cutting. The deficit is massive. Bond vigilantes are watching.
Could rates fall? Sure. To 5%, maybe 4.5% if the economy weakens. But 2%? That would require an economic disaster nobody actually wants.
Politicians promise cheap money because it sounds good. Markets don't care about promises. They care about supply, demand, inflation, and risk.
If you're waiting for 2% mortgages to buy a house, you're waiting for a crisis. That's not a housing strategy — that's a recession bet.
Let's be clear: the President doesn't set mortgage rates. The Fed doesn't directly set mortgage rates either. The bond market does.
30-year fixed mortgages track the 10-year Treasury yield, plus a spread for credit risk and prepayment risk. That spread has averaged 1.5-2% historically.
For mortgages to hit 2%, you'd need 10-year yields near zero. That only happens during severe recessions or deflationary crises — think 2020 pandemic panic or 2008 financial collapse.
Right now, 10-year yields are around 4.5%. Inflation is sticky. The Fed is barely cutting. The deficit is massive. Bond vigilantes are watching.
Could rates fall? Sure. To 5%, maybe 4.5% if the economy weakens. But 2%? That would require an economic disaster nobody actually wants.
Politicians promise cheap money because it sounds good. Markets don't care about promises. They care about supply, demand, inflation, and risk.
If you're waiting for 2% mortgages to buy a house, you're waiting for a crisis. That's not a housing strategy — that's a recession bet.