Hassett Says Factory Investment Boom Is Driving Up Mortgage Rates

White House National Economic Council Director Kevin Hassett said Friday that mortgage rates above 7 percent are partly a byproduct of a surge in business investment, arguing that strong economic growth is pulling capital away from home lending and toward factory construction.

Speaking on Fox News Channel’s “America’s Newsroom,” Hassett told co-host Bill Hemmer that when the economy is expanding quickly, longer-term interest rates can rise for reasons other than inflation.

“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,” Hassett said.

Hemmer had pressed Hassett on the housing market, noting that current mortgage rates are “well above 7% now,” which he called a problem for homebuyers.

Hassett acknowledged the strain but pointed to broader housing figures he said tell a more positive story. “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,” he said. “And so, on net, housing supply, housing purchases, housing permits are way up year-over-year.”

He added that rising incomes alongside rising mortgage rates require a broader view of the housing market. “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,” Hassett said.

Hassett said the administration still wants to see mortgage rates come down and is sympathetic to the difficulties facing first-time buyers.

“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,” he said.

Hassett did not detail the policies he referenced for first-time homebuyers.