White House on High Mortgage Rates: Rates Can Rise Due to Factory Boom

On Friday’s broadcast of the Fox News Channel’s “America’s Newsroom,” White House National Economic Council Director Kevin Hassett argued that when there is strong growth, “then longer-term interest rates can sometimes go up, not because of inflation, but because, like, all of these businesses have a high demand for capital because they’re building factories, and so they borrow and people are building factories instead of maybe lending to homeowners.” “And while we definitely want mortgage rates to go down and we feel the pain of the first-time homebuyer and have some policies coming to talk about that, housing data is actually up from this because the rest of the economy is doing so well.”

Co-host Bill Hemmer asked, “Quickly now, here is the bug in the basket that popped up this week, alright: Current mortgage rates are well above 7% now, and for the housing market, that is not good. Your response on that.”

Hassett responded, “Right, well, what happens, right? When the economy is growing really high, and then longer-term interest rates can sometimes go up, not because of inflation, but because, like, all of these businesses have a high demand for capital because they’re building factories, and so they borrow and people are building factories instead of maybe lending to homeowners. But if you look at the housing data over the summer, everybody is basically seeing the boom in the economy and the strong labor market and the strong wage growth. And so, on net, housing supply, housing purchases, housing permits are way up year-over-year. And so, when incomes go up and mortgage rates go up, then you have to sort of look at the whole picture to think about the housing market. And while we definitely want mortgage rates to go down and we feel the pain of the first-time homebuyer and have some policies coming to talk about that, housing data is actually up from this because the rest of the economy is doing so well.”

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