Or as a different option, slide the seat tube fender clamp higher up on the seat tube. I had a similar fender, and couldn't get it to work for crap til I slid it up higher. Then the rear drops closer to the tire. Then you can lower the rear of the rack, because it looks like it is up so high exclusively to clear the fender.

The fenders I had had a snap clamp for where it bolts to the cross piece on the seat stays, so you could slide that forward and back. Yours may not work that way, so you may not be able to slide the seat post clamp higher.