As Scott Bessent, Trump’s Treasury secretary nominee, endured his first Congressional hearing on Thursday, he was grilled about America’s economic challenges.
Even before he started, however, evidence had emerged of these: on Wednesday the Mortgage Bankers Association reported that the 30-year mortgage rate had jumped above 7 per cent, following a 1 percentage point rise in 10-year Treasury yields since last autumn.
This is not particularly punitive by the standards of financial history. Since 1971, the average mortgage rate has been 7.73 per cent — and before 1990, rates generally sat over 10 per cent. But the rub is that US voters have become used to rates of 3 per cent in the past decade. Indeed the real estate industry has became so addicted to cheap money that insiders tell me that if 10-year yields rise to 5 per cent for any period of time — from the current 4.65 per cent level — they expect strings of defaults.