Mortgage rates in the US are climbing due to a sell-off in U.S. Treasury bonds, according to CNBC. The situation is being watched closely due to an accelerated sell-off in China, which could exacerbate the issue.
The 10-year Treasury yield is closely tied to mortgage rates. If investors decide to sell U.S. Treasury bonds, it can lead to lower prices and higher mortgage rates for Americans, especially those with variable-rate mortgages.
Foreign countries own $1.32 trillion of U.S. mortgage-backed securities, making them a key player in the global market. China is one of the largest holders, along with Japan, Taiwan, and Canada. If Chinese institutions start selling off MBS, it could ripple through global financial markets.
The potential sell-off could impact US homebuyers, particularly those with variable-rate mortgages or refinancing plans. Higher mortgage rates can lead to higher monthly payments, reduced demand, and lower housing prices. This scenario may also lead to a tightening of lending standards, requiring larger down payments and stricter credit score requirements.
To prepare for the potential mortgage rate increases, experts recommend building up an emergency fund and securing a good interest rate if possible. Locking in a pre-approval or exploring FHA loan options may be beneficial for first-time homebuyers.
Source: https://finance.yahoo.com/news/china-may-retaliatory-move-experts-095500223.html