{"id":21128,"date":"2025-09-25T21:31:39","date_gmt":"2025-09-25T21:31:39","guid":{"rendered":"https:\/\/finderica.com\/?p=21128"},"modified":"2025-09-25T21:31:39","modified_gmt":"2025-09-25T21:31:39","slug":"bessent-waffles-when-asked-if-fed-cuts-will-lower-mortgage-rates","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=21128","title":{"rendered":"Bessent Waffles When Asked If Fed Cuts Will Lower Mortgage Rates"},"content":{"rendered":"
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I recently came across some apparent quotes from Treasury Secretary Scott Bessent regarding mortgage rates.<\/p>\n

One social media post on X claimed<\/a> he said we were going into an easing cycle and that we \u201cwill see a massive decrease in mortgage rates.\u201d<\/p>\n

The first part of the statement is true. He actually said that. The second part I couldn\u2019t find. Perhaps it was said elsewhere but it seems highly unlikely.<\/p>\n

He was on Fox Business with Maria Bartiromo yesterday discussing<\/a> a variety of topics, including Fed rate cuts and interviews for a new Fed chair.<\/p>\n

Bartiromo asked him directly if he thought the Fed cuts would bring down mortgage rates and he waffled and rambled like no other.<\/p>\n

Bessent\u2019s Longwinded Answer Regarding the Fed and Mortgage Rates<\/h2>\n

On Mornings with Maria yesterday, Bartiromo asked: \u201cDo you think it\u2019s a certainty that as the Fed lowers rates that you\u2019re actually going to see a real impact on, for example, mortgage rates.\u201d<\/p>\n

Treasury Secretary Scott Bessent responded by saying, \u201cI do believe that we are seeing, uh, will see a substantial drop in inflation, I think that if the housing numbers are done through imputed rent, that we\u2019re gonna see, they run on about a six month lag, everything that President Trump is doing in terms of deregulation, which I think is the underrated third leg of his economic policies, that\u2019s all disinflationary, and you know, we\u2019ll see what happens with this AI boom\u2026\u201d<\/p>\n

That\u2019s quite a mouthful to a yes or no question. And he didn\u2019t even answer the question. Well, at least not directly, as everyone would have liked.<\/p>\n

He then went on to talk about the advent of the railroads and the \u201cwonderful inflationary growth\u201d that came with it, remarking that the same thing took place in the 1990s.<\/p>\n

Aside from rambling on and on and even ending his thought on a possible upcoming \u201cAI boom,\u201d he basically said if inflation comes down, mortgage rates will come down too.<\/p>\n

So there is an answer in there, somewhere, if you look hard enough and read between the lines.<\/p>\n

But perhaps most importantly, he dispels the myth that the Fed controls mortgage rates.<\/p>\n

What really determines mortgage rates is economic data, such as inflation and labor market conditions.<\/p>\n

Inflation is the enemy of low mortgage rates, and it\u2019s been a main driver of higher mortgage rates the past few years.<\/p>\n

It was exacerbated by the end of Quantitative Easing (QE), in which the Federal Reserve bought trillions in residential mortgage-backed securities (MBS) to bring down rates.<\/p>\n

Of course, all those easy money days before, after, and during the pandemic led to some of the worst inflation we\u2019ve seen in decades.<\/p>\n

And we\u2019ve been paying the price since mid-2022 via markedly higher mortgage rates.<\/p>\n

The Trump Admin Has Made It a Priority to Lower Mortgage Rates<\/h2>\n

Since Trump got elected, his administration has made it a priority to lower interest rates to get the economy (and housing market) moving again.<\/p>\n

There\u2019s just the issue of that creating another period of easy money, which could re-inflate prices and lead to another ugly wave of inflation.<\/p>\n

The reason the Fed hiked 11 times in succession was to combat out-of-control inflation. It was only when inflation readings began to cool that the Fed made their pivot.<\/p>\n

Then there\u2019s labor, which caused mortgage rates to spike last September right after the Fed coincidentally made its first rate cut of this easing cycle.<\/p>\n

That confused a lot of people because many expected mortgage rates to go down after the Fed cut.<\/p>\n

What many failed to recognize was that the 30-year fixed fell a ton leading up to that cut, and so at least with regard to Fed policy, it was already baked in.<\/p>\n

The Fed just cut again this September and mortgage rates bounced higher as well, though not because of a hot jobs report. It may have simply been a sell the news moment.<\/p>\n

That key jobs report comes again next Friday and if it does somehow come in hot again, well, you might see a similar situation where mortgage rates start ascending again.<\/p>\n

But before that happens, we have the Fed\u2019s preferred inflation gauge, the PCE report, to be released tomorrow.<\/p>\n

Bessent Says Fed Has Been Too High for Too Long<\/h2>\n

Bessent also told Bartiromo that, \u201cClearly the Federal Reserve has been too high for too long and we\u2019re going into an easing cycle here and I\u2019m not sure why Chair Powell has backed up a bit here.\u201d<\/p>\n

He called for \u201cat least\u201d 100 to 150 basis points in cuts by the end of this year, while the expectation is for 50 bps at best.<\/p>\n

He has to know that the Fed is continuing to grapple with an unclear picture on inflation, partially due to things like tariffs the admin implemented, and even an uncertain path for labor.<\/p>\n

Bessent did note that we\u2019ve had nearly two million downward revisions in the labor market, and jobs data has indeed been ugly of late.<\/p>\n

That\u2019s why mortgage rates are a lot lower today. But if labor and inflation don\u2019t continue to show signs of cooling, it won\u2019t matter what the Fed does.<\/p>\n

It\u2019s a tricky situation for Bessent and the Trump administration because they want lower rates, but not at the cost of the economy.<\/p>\n

How they manage to lower rates while also making the economy boom remains to be seen.<\/p>\n

(photo: Rebecca Siegel<\/a>)<\/p>\n

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\"Colin<\/div>\n
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Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.<\/p>\n<\/div>\n<\/section>\n

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\"Colin<\/div>\n
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