Why Reducing Interest Rates Might Not Achieve the Housing Affordability Washington Seeks
CBO Forecasts on Interest Rates and Treasury Yields
According to a recent report from the Congressional Budget Office, the Federal Reserve’s benchmark interest rate is anticipated to decrease to 3.4% by year’s end and remain at that level throughout President Trump’s term, lasting until 2028. This marks a decline from the projected 3.9% rate in the final quarter of 2025.
However, future developments may not always align with expectations. Even as the Fed lowers rates, the CBO estimates that the yield on 10-year Treasury notes—which directly affects borrowing costs for mortgages, car loans, and credit cards—will gradually increase. The yield is expected to move from 4.1% in the last quarter of 2025 to 4.3% over time.
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