Housing costs would spike by 22% with the rate for 30-year, fixed rate mortgages rising above 8%. There would be 700,000 fewer homes sold in the 18 months after July — that’s almost 12% of the 6 million sales currently expected during that span. In other words, if you thought this past year of skyrocketing mortgage rates and plunging sales was miserable for the housing market, just wait, there’s more. If the United States defaults on its debts, we can do the past 12 months all over again.
” In the event of the debt ceiling not being addressed, mortgage rates would likely climb quickly as investors become worried about almost every type of bond. Government issued Treasury bonds have been considered a risk-free, safe-haven for investors. If they suddenly carry risk, Tucker said, “it is an earthquake on which everything else is built.” Uncertainty in Treasuries being repaid will lead investors to require greater return for purchasing them.