BRYAN, Texas (KBTX) – The Federal Reserve cut interest rates by another quarter point last week, but mortgage rates remain high. Dennis Jansen, professor of economics at Texas A&M, joined First News at Four to explain why mortgage rates aren’t keeping up.

Jansen said the interest rate the Fed lowered was on the overnight rate, which is a very short-term interest rate.

“The mortgage rate, as you know, could be a 30-year mortgage rate. So this has a long duration,” Jansen advised. “Mortgage rates have actually risen during this period.”

Jansen also said he disagrees that rates are actually going down, despite the messaging and the national headlines: “The 10-year Treasury rate is going up, the mortgage rate is going up. It’s just that the Federal Reserve has been trying to lower interest rates, right, but I don’t think they’re succeeding.”

Many voters in the United States listed the economy as a top issue. It’s what some political pundits say propelled former President-elect Donald Trump back into the White House. Jansen said some of the policies established during his campaign could have a considerable impact on the wider economy.

“If you look at unauthorized employment, it could be up to 4 percent of our workforce, which is quite high. The downsizing will also have big effects on the economy, and I would say not good effects,” explained Jansen. “If you look at taxes, the Trump tax cuts are set to expire in 2025, but I think this election means they probably won’t. So there won’t be the kind of tax hike that would follow when those tax cuts would expire.”

“I think Trump is almost a ‘deregulation president,’ and so that probably helps, at least on the business side,” he offered.

Jansen also explained why he thought the idea of ​​putting a tariff on imported goods would not be a good thing for the American consumer.

“If he gets Congress to pass laws that raise tariffs 20 percent on all imported goods, that means he doesn’t like that, but that’s a tax. Tariffs are just a word for a special type of tax that is applied to goods and will be passed on to consumers,” explained Jansen.

However, the economics expert said there is still a lot of uncertainty going forward.

“There’s a lot of conjecture about what would actually happen in all these different things that have been talked about, that GDP might go up 1 percent and wages might go up 1 percent over what they would have,” said he.

For the economy to improve and be healthy, Jansen said spending needs to slow.

“The deficits are too big; debt is growing too fast. We are increasing the debt so fast that our interest payments on the debt are increasing so fast that they will be greater than defense spending. I just think this is a situation that, yes, can happen, but it can’t last forever. Something has to be done,” Jansen added.

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