On Tuesday, the yield on the 10-year Treasury surged nearly 10 basis points in a few hours, rising above 4.49 percent. The rising yield came after the release of new price-inflation data showing that CPI growth had hit a five-month high and remained well above the Federal Reserve’s two-percent target for price inflation. Rising yields often indicate that bond investors believe price inflation will continue to grow, so it was probably no coincidence that bond yields—especially on longer-term bonds—jumped following the report’s release.

Whatever the reason behind the rising yield, this is bad news for those who were looking for a good reason to believe that mortgage rates will significantly fall again soon. Mortgages for single-family homes closely follow the 10-year yield, and, as the 10-year yield has risen in recent years, the average 30-year mortgage more than doubled. Ity rose from under three percent in mid 2021 to above seven percent by late 2023. It has remained above six percent ever since.

Meanwhile, home prices continued to rise well into mid 2025. This combination of rising home prices and rising mortgage rates has made housing unaffordable for a growing share of propsective homebuyers.

In response to this trend, The Trump administration’s FHFA Director, Bill Pulte—a scion and nepo baby from a wealthy family of homebuilders—has demanded that the central bank intervene to force down mortgage rates in order to stimulate residential home sales and home prices. Pulte claims that Fed chairman Jerome Powell’s lack of enthusiasm for lowering interest rates is “the main reason” that there is not more home-sales activity. Pulte concludes that Powell is “hurting the mortgage market” by “improperly keeping interest rates high.” Pulte apparently believes that more people would buy homes if only the Fed fixed the situation with lower interest rates. ..

Not only is Pulte wrong that falling mortgage rates necessarily make homeownership more affordable, he is also probably wrong that the Fed can reduce those rates by targeting a lower policy rate. If Pulte really wanted to see homes become more affordable, he would push for less monetary inflation and for lower federal deficits. He would push for the Fed to reduce its balance sheet of mortgage backed securities. All that, however, would lead to falling home prices, and that would run afoul of the administration’s Wall Street allies who incessantly demand more asset price inflation.