Long-term rates are rising due to a mix of persistent inflation fears, high government debt requiring more bond issuance (increasing supply), strong economic growth expectations, and a shift to higher real interest rates, making investors demand more to tie up money long-term, even as central banks cut short-term rates. These factors increase the "term premium," the extra yield demanded for long-term risk, driven by uncertainty about future inflation and government fiscal health.
When the Prime Rate is high, borrowing money is more expensive. This causes increased interest rates and lower spending. This also effectively lowers inflation. This is why the Federal Reserve raised interest rates in 2022, to fight rising inflation.
Bond yields respond to changes in the economy. When the economy grows quickly and inflation rises, bond yields increase. If the Federal Reserve raises the federal funds target rate, bond yields also climb.
“We can drop interest rates to a level, and that's one thing we do want to do,” said Trump. “That's natural. That's good for everybody. You know, the dropping of the interest rate, we should be paying a much lower interest than we are.”
When the supply of Treasuries increases and demand fails to keep pace, prices fall, leading to a rise in yields. This is especially pertinent for long-term bonds like the 10-year note, where investors require a premium to hold the asset amid high supply and potential inflationary risk.
While rising yields cause bond prices to fall, as they did in 2022, fixed-income investors can take advantage of elevated yields to pick up higher levels of income.
Historically, mortgage rates have spent much more time above 5% than below it. That doesn't mean rates can't decrease further, but it does suggest that a sustained return to 3% would likely require another major economic disruption.
Since World War II, according to many economic metrics including job creation, GDP growth, stock market returns, personal income growth, and corporate profits, the United States economy has performed significantly better on average under the administrations of Democratic presidents than Republican presidents.
A $400,000 mortgage at 7% interest results in a principal & interest payment of about $2,661 per month for a 30-year loan or around $3,595 per month for a 15-year loan, not including taxes, insurance, or PMI. Your total monthly cost will be higher once those escrow items (property taxes, homeowners insurance, etc.) are added.
90% of your mortgage payment going to interest means you're in the early years of your loan, a natural part of mortgage amortization, where payments cover mostly interest on your large starting balance; as you pay down the principal, the interest portion shrinks, and more goes to principal, shifting over time. This happens because interest is calculated on the remaining loan balance, which is highest at the beginning.
In 2025, interest rates generally trended downward, with the Federal Reserve cutting rates to combat cooling inflation, leading to lower mortgage rates (around 6-7% average for 30-year fixed) compared to 2023/2024 peaks, though they remained above pandemic lows, with projections suggesting further moderation into 2026 as the Fed paused and assessed economic data.
Republicans had markedly higher household income and net worth in both the graduate and sibling samples. In the graduate sample, Republicans attained slightly higher education levels. Republicans also reported higher levels of traits reflecting personal responsibility than Democrats, including lower avoidance coping.
Recessions
Trump wants interest rates to fall sharply so the government can borrow more cheaply and Americans can pay lower borrowing costs for new homes, cars or other large purchases, as worries about high costs have soured some voters on his economic management.
Banks generally make money by borrowing money from depositors and compensating them with a certain interest rate. The banks will lend the money out to borrowers, charging the borrowers a higher interest rate and profiting off the interest rate spread.
Key Takeaways