Please ensure Javascript is enabled for purposes of website accessibility
Debt Ceiling Impasse Threatens Housing Market with 8% Mortgage Rates, Sales Drop
News
By News
Published 11 months ago on
May 22, 2023

Share

Getting your Trinity Audio player ready...

As lawmakers struggle to reach a debt ceiling agreement, Treasury Secretary Janet Yellen warns of potential economic “calamity.” Zillow’s senior economist Jeff Tucker suggests that if the U.S. defaults on its debts, possibly by June 1, mortgage rates could soar to 8.4% by September. This would increase mortgage payments for new borrowers by over 20%, further straining affordability already impacted by last year’s jump from 3% to 6% mortgage rates and a 41% surge in home prices during the pandemic.

Housing Market Headed for a ‘Deep Freeze’ if US Defaults

Although Tucker acknowledges a U.S. default is “unlikely,” such a scenario would send the housing market into a “deep freeze.” For example, on a $600,000 home with a 20% down payment, monthly mortgage payments would rise from $2,878 at 6% to $3,522 at 8%, pricing many buyers out of the market.

Existing Home Sales Could Plummet 23% Later This Year

Zillow estimates that in the event of a debt default, existing home sales could plummet 23% later this year, and home values may be 5% lower by the end of 2024 compared to a no-default scenario. A mortgage rate increase to 8% would cause existing home sales to drop from 4.3 million in April to 3.3 million in September, further destabilizing the recovering housing market.

Read more on Fortune.com

RELATED TOPICS:

DON'T MISS

Netanyahu Dismisses Calls for Restraint, Says Israel Will Decide Iran Attack Response

DON'T MISS

New Study Calculates Climate Change’s Economic Bite Will Hit About $38 Trillion a Year by 2049

DON'T MISS

Biden Pledges to Block Japanese Takeover of US Steel and Promises Tariffs on Chinese Steel

DON'T MISS

Don Arax Talks About His New Football Job at Visalia’s Central Valley Christian

DON'T MISS

Dem House Challengers Salas, Gray Flex Fundraising Muscle

DON'T MISS

Career-High Strike Outs for Ryan Weathers as Marlins Best Giants 6-3

DON'T MISS

LeBron’s Lakers Top Pelicans in Play-in, Set up Playoff Rematch With Nuggets

DON'T MISS

Storm Dumps Record Rain and Floods Dubai’s Airport

DON'T MISS

Mookie Betts Matches Career Best with 5 Hits in Dodgers’ 6-2 Victory Over Nationals

DON'T MISS

Klay Thompson Misses All 10 Shots in Potential Last Game With the Warriors

UP NEXT

Senate Will Convene the Mayorkas Impeachment Trial as Democrats Plot a Quick Dismissal

UP NEXT

Bob Graham, Former US Senator and Governor of Florida, Passes Away at 87

UP NEXT

Coalition: CA Lawmakers Need to Roll Back Proposed ‘Utility Tax’

UP NEXT

Wall Street’s Mixed Trading Day

UP NEXT

Charges Against Trump and Jan. 6 Rioters at Stake as Supreme Court Hears Debate Over Obstruction Law

UP NEXT

Paris Hilton Backs California Bill to Bring More Transparency to Youth Treatment Facilities

UP NEXT

House to Send Mayorkas Impeachment Articles to the Senate, Forcing a Trial

UP NEXT

Facing a Republican Revolt, House Speaker Johnson Pushes Ahead on US Aid for Ukraine

UP NEXT

Fresno Coin Gallery Owner Reveals Why Gold & Silver Are Hot Investments

UP NEXT

Biden’s Embrace of Trump’s Tariffs Could Spell Trouble for His Reelection: Fareed Zakaria

Don Arax Talks About His New Football Job at Visalia’s Central Valley Christian

1 hour ago

Dem House Challengers Salas, Gray Flex Fundraising Muscle

3 hours ago

Career-High Strike Outs for Ryan Weathers as Marlins Best Giants 6-3

3 hours ago

LeBron’s Lakers Top Pelicans in Play-in, Set up Playoff Rematch With Nuggets

3 hours ago

Storm Dumps Record Rain and Floods Dubai’s Airport

3 hours ago

Mookie Betts Matches Career Best with 5 Hits in Dodgers’ 6-2 Victory Over Nationals

3 hours ago

Klay Thompson Misses All 10 Shots in Potential Last Game With the Warriors

3 hours ago

NBA Bans Jontay Porter for Life After Probe Shows He Bet on Games

4 hours ago

Carbon Capture Isn’t Nearly as ‘Green’ as Fossil Fuel Promoters Make It Sound

4 hours ago

Southern California City Council Gives Key Approval for Disneyland Expansion Plan

4 hours ago

Netanyahu Dismisses Calls for Restraint, Says Israel Will Decide Iran Attack Response

JERUSALEM — Israeli Prime Minister Benjamin Netanyahu said Wednesday his country would be the one to decide whether and how to respond to Ir...

14 mins ago

14 mins ago

Netanyahu Dismisses Calls for Restraint, Says Israel Will Decide Iran Attack Response

25 mins ago

New Study Calculates Climate Change’s Economic Bite Will Hit About $38 Trillion a Year by 2049

46 mins ago

Biden Pledges to Block Japanese Takeover of US Steel and Promises Tariffs on Chinese Steel

1 hour ago

Don Arax Talks About His New Football Job at Visalia’s Central Valley Christian

3 hours ago

Dem House Challengers Salas, Gray Flex Fundraising Muscle

3 hours ago

Career-High Strike Outs for Ryan Weathers as Marlins Best Giants 6-3

3 hours ago

LeBron’s Lakers Top Pelicans in Play-in, Set up Playoff Rematch With Nuggets

3 hours ago

Storm Dumps Record Rain and Floods Dubai’s Airport

MENU

CONNECT WITH US

Search

Send this to a friend