- The cost for a 30-year fixed-rate mortgage crept up to levels not seen since February, reflecting bond market fears over Trump’s plan to pay for tax cuts with an estimated $3.8 trillion in new debt. “Trump and Republicans are directly responsible for the spike in the 30-year Treasury bond yield and mortgage rates,” argued Ted Lieu, the fourth-highest-ranking Democrat in the House.
Democrats say President Trump’s proposed tax bill is responsible for pushing up the cost of owning a home as bond markets revolt against the prospect of trillions of dollars in new borrowing added on top of the national debt.
The average cost of a 30-year fixed rate mortgage—which closely tracks long-dated Treasury yields—hit 6.86% this week, according to data from U.S.-government-sponsored lender Freddie Mac. It is the highest since mid-February when Trump hadn’t yet sparked fears of a recession with his steep tariffs.
“Trump and Republicans are directly responsible for the spike in the 30-year Treasury bond yield and mortgage rates,” wrote Ted Lieu, the fourth-highest-ranking Democrat in the House as caucus vice-chair.
Fortune reached out to the White House for comment, and will update should it respond.
‘This is Robin Hood in reverse’
The higher borrowing cost stems from concerns over the affordability of Trump’s tax cuts, which prompted the Moody’s downgrade of U.S. sovereign debt last week.
A poorly received Treasury auction of long-dated debt appears to be proving billionaire hedge fund manager Paul Tudor Jones right, that bond markets would choke on Trump’s regressive tax cut agenda, financed by new borrowing.
Should Senate Republicans send the bill to Trump for approval, it could lead to the closing of hospitals and nursing homes across the country, many in politically conservative rural areas.
“They will still—with their tax bill—be adding over $4 trillion to the national debt to cover their tax break for the wealthiest people in our country,” former House Speaker Nancy Pelosi said this week on the floor of Congress.
“This is Robin Hood in reverse: taking resources from where it is most needed, the people who need it most, and giving it to those who need it least,” she noted.
UBS warns international investors will pull money out of the U.S. market
Mortgage rates have been higher, hitting 7.79% in October 2023, according to Freddie Mac.
This peak, however, came shortly after Jerome Powell hiked the Fed funds rate one final time to a minimum of 5.25%.
Starting this past September, his FOMC policy-setting committee has since reduced the overnight interest rate by a full percentage point. Therefore, the current cost of a 30-year fixed mortgage is still very high, given the Fed’s recent easing on the short end of the yield curve.
Trump and Republicans are directly responsible for the spike in the 30 year treasury bond yield and mortgage rates. https://t.co/AmK7Gk277b
— Ted Lieu (@tedlieu) May 22, 2025
Investors are gradually reassessing their financial risks under the current administration, especially following years in which money managers overweighted their portfolios in favor of U.S. assets.
UBS anticipates that international investors will reverse 60% of their five-percentage-point increase in ownership of U.S. equity markets since 2018.
“We think there has been a fundamental shift in how institutional investors view their U.S. exposure,” the Swiss bank wrote in a research note on Friday.
‘It is taking away health care for nearly 14 million Americans’
According to an analysis this week by the Congressional Budget Office, the bill’s tax cuts will add $3.8 trillion to the deficit even as it slashes $698 billion off of Medicaid, which provides health care for low-income Americans.
It would also eliminate $267 billion that goes to the federal Supplemental Nutrition Assistance Program (SNAP), a.k.a. food stamps.
In return, the debt ceiling will be raised, and the 2017 Trump tax cuts, due to sunset at the end of this year, will be made permanent.
Other boons include more generous State and Local Tax (SALT) deductions and the preservation of the carried interest loophole, which benefits hedge funds and family offices, among other professional money managers.
House Minority Whip Katherine Clark said the resulting debt will burden future generations.
“It is taking away health care for nearly 14 million Americans; it is the biggest cut to food programs we’ve ever seen,” the second-highest-ranking House Democrat said on Thursday. “What we have is a bill that is almost like it’s constructed by cartoon villains.”
Even Steve Bannon, Trump’s former chief strategist, has warned Republican leadership against passing legislation that would hurt their MAGA base.
