Mortgage rates have surged above 7% following Moody’s downgrade of the US credit rating. The credit-rating agency cut the country’s sovereign debt rating from Aa1 to Aaa, stripping it of its triple-A rating. This move pushed bond prices up, increasing the 30-year fixed-rate mortgage by 12 basis points to 7.04%.
The housing market is struggling with affordability issues, with high mortgage rates and record-high home prices making homeownership difficult for many Americans. Home sales plummeted to a 30-year low in 2024, and economists say the timing of the credit downgrade is not ideal for prospective buyers.
However, there are signs that the housing market is becoming more buyer-friendly. Price cuts are becoming more common, with builders slashing prices on new homes by an average of 5%. More selling homeowners are also offering concessions to buyers in some markets. The median sale price of a US home remains high at $438,500, according to recent data.
Economic uncertainty and policy instability are weighing on the housing market, with builders expressing pessimism due to high interest rates, uncertain policies, and rising building-material costs. Despite this, the industry is adapting, and buyers may find more affordable options in the coming months.
Source: https://www.marketwatch.com/story/mortgage-rates-jump-above-7-after-moodys-downgrade-of-u-s-credit-0d287336