U.S. mortgage rates approach 7%, hitting a new high in over a year; Vice President Pence publicly calls for the Federal Reserve to cut interest rates.

U.S. Vice President Vance openly called for the Federal Reserve to lower interest rates on Thursday, stating that reducing borrowing costs would help improve housing affordability in the United States, and he believes that given recent inflation data, a rate cut is an appropriate and responsible policy choice. As Vance made these comments, the average rate for a 30-year fixed mortgage in the U.S. rose to 6.71%, the highest level in over a year, and is gradually approaching the 7% mark. With U.S. Treasury yields continuing to climb, high financing costs are once again hitting housing demand, making housing affordability an important reason for the Trump administration to pressure the Federal Reserve. However, as the White House calls for a rate cut, Federal Reserve Chairman Waller has recently issued starkly different hawkish signals, emphasizing that if inflation does not continue to decline, the Fed may need to further tighten monetary policy. With less than two weeks until the September policy meeting, pressures in the housing market, inflation risks, and the independence of the Federal Reserve are simultaneously becoming focal points in the market. Vance openly calls on the Fed to lower rates: hoping Americans can afford homes At a White House press conference on Thursday, Vance was asked about the recent volatility in the U.S. bond market, to which he responded that President Trump is highly concerned about interest rates, primarily because he hopes that the American public can afford housing. He stated, "When interest rates rise, it means that borrowing costs also go up." He further clarified that the Trump administration believes the Federal Reserve should lower interest rates, asserting that based on recent U.S. inflation data, a rate cut is "appropriate and responsible." Vance mentioned that the Trump administration has taken various measures to try to lower interest rates, "but it would be even better if we could get some help from the Fed." His remarks come as U.S. housing financing costs have again risen sharply. High mortgage rates not only compress homebuyers' purchasing power but are also becoming an increasingly prominent economic issue ahead of the midterm elections in November. U.S. 30-Year Mortgage Rate Rises to 6.71%, Highest in Over a Year Data released by Freddie Mac showed that the average rate for a 30-year fixed mortgage rose to 6.71% from 6.66% the previous week, reaching its highest level since July 2025. In comparison, mortgage rates at the same time a year ago were at 6.5%. The U.S. 30-year mortgage rate had previously hovered around 6.5% for an extended period but is now approaching 7%. For homebuyers already squeezed by high prices and financing costs, this means housing affordability is likely to worsen further. Realtor.com senior economist Jake Krimmel stated that mortgage rates were in a declining trend a year ago, so the year-over-year comparisons for the coming months could look increasingly dismal. As the November midterm elections approach, housing affordability is becoming one of the core topics in U.S. political and economic policy discussions. Surging U.S. Treasury Yields Push Mortgage Costs Higher; 10-Year Yield Hits 4.82% The rise in U.S. mortgage rates is closely related to the recent sell-off in the U.S. Treasury market. The 30-year fixed mortgage rate is typically influenced by long-term Treasury yields, and on Wednesday, the yield on the 10-year U.S. Treasury bond briefly reached 4.82%, the highest level since October 2023. U.S. long-term Treasury yields are currently undergoing the longest period of elevated levels since 2006. Massive fiscal deficits, a new round of corporate bond issuance, and the upcoming key Federal Reserve policy meeting are making investors more cautious about holding U.S. long-term Treasuries, thus pushing up long-term borrowing costs. The global bond market is also generally under pressure, though the current decline is still far from the severe drop in the bond market in 2022. At that time, soaring inflation forced major global central banks to raise interest rates rapidly, leading to a significant drop in bond prices. Nonetheless, the recent rise in U.S. Treasury yields is already starting to exert a noticeable impact on the interest rate-sensitive housing market in the real economy. High Rates Begin to Weaken Housing Demand; August Listings Turn Negative Year-on-Year Mortgage rates remaining above 6% are gradually diminishing U.S. housing demand. The latest monthly housing market trend report from Realtor.com indicates that the number of homes for sale in August dropped by 0.2% year-on-year, marking the first year-on-year decline since November 2025. Krimmel stated, "It appears that August was the month when high mortgage rates really began to catch up with housing demand." This shift means that the impact of high financing costs on the real estate market may be translating from worsening housing affordability to actual transaction activity. Especially with the 30-year mortgage rate again nearing 7%, even if home prices remain unchanged, buyers will face increased monthly mortgage payments, thereby forcing more potential buyers to postpone their housing plans. The White House calls for lower rates while Waller warns of inflation risks However, while the Trump administration hopes to alleviate pressure in the housing market through lower rates, the current policy environment for the Federal Reserve does not support an easy shift towards easing. Less than a week ago, Waller reiterated at the Jackson Hole Global Central Bank Summit in Wyoming that the Fed is committed to bringing inflation back to its 2% target, emphasizing that short-term interest rates remain an important policy tool for controlling inflation. Waller stated, "Short-term rates are the primary tool for achieving our dual mandate." His remarks were interpreted by the market as indicating that if U.S. inflation cannot continue to convincingly decline, the Fed may still opt for further rate hikes. This has led to a clear divergence in policy requests between the White House and the Fed: the Trump administration seeks lower rates to reduce housing and financing costs, while the Fed needs to prevent inflation from remaining persistently above its target. Recent economic data also highlights this contradiction. The U.S. ISM Services PMI for August rose to 55.4, with both business activity and new orders showing significant strength, while the service price index climbed to 72.6, the highest level since August 2022, indicating that the U.S. economy still has resilience, even as price pressures have not completely dissipated. Divergence in Opinions Within the Federal Reserve; Uncertainty Remains Ahead of September Rate Decision There is also a divide within the Federal Reserve regarding the next steps in policy. Fed Governor Barr stated on Tuesday that he is prepared to support further rate hikes if inflation remains elevated. However, Fed Governor Waller issued different signals on Thursday, indicating that he currently favors keeping rates unchanged at the September meeting. Meanwhile, the latest figures show that initial jobless claims in the U.S. rose more than expected, signaling a degree of cooling in the labor market, which has prompted traders to reduce bets on further tightening of monetary policy by the Fed. Currently, market expectations for the Federal Reserve's interest rate decision at the September 15-16 meeting are roughly split in half, indicating that there remains significant uncertainty regarding the policy outlook.