REALTORS Warn That Debt Ceiling Impasse May Run Interest Rates Up and Home Sales Down

Dennis Norman - St Louis REALTOR Of The Year 2013Lawrence Yun, chief economist for the National Association of REALTORS (NAR), cautioned today that, given the fact the U.S. Government spends one dollar for every 75 -80 cents it takes in, if the debt ceiling isn’t raised,  the government will have to decide where to cut its spending.  Should the government choose not to pay its interest obligations, “we can expect interest rates on Treasury bonds to rise…and if that happens, mortgage rates will rise, because mortgage rates follow Treasury rates.”

Yun went on to say that if mortgage interest rates do rise we can expect home sales to drop by around 350,000 to 450,000 homes per year for every 1 percent increase in mortgage interest rates.

My advice to anyone in the market to buy a home is to buy sooner than later and, if possible, lock in your mortgage interest rate now before rates go up (think you can’t lock in your rate until after you have found a home? Wrong, contact me and I’ll tell you how).

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