From Yahoo Finance: 2025-04-27 05:55:00

Mortgage rates are rising due to a sell-off in U.S. Treasury bonds, potentially worsening with an accelerated sell-off in China. Foreign countries hold 15% of U.S. mortgage-backed securities, with China being a major holder. Concerns arise about the impact of countries like China dumping U.S. Treasuries and MBS in response to tariffs.

China could potentially unload U.S. Treasuries, with President Trump imposing tariffs of 145% on Chinese goods and China retaliating with tariffs of 125% on American goods. Foreign countries own $1.32 trillion of U.S. mortgage-backed securities, with speculation that China is selling off some of its U.S. MBS.

An escalating trade war raises uncertainty, with potential consequences if China decides to absorb losses by selling off U.S. MBS. The impact on mortgage rates and global financial markets could be significant, as China aims to keep its currency lower than the U.S. dollar to maintain competitiveness in exports.

MBS investors influence mortgage rates, and a sell-off could lead to higher mortgage rates for Americans, affecting those with variable-rate mortgages. Homeowners could face higher payments with refinancing becoming less attractive as rates rise, potentially leading to reduced demand and lower housing prices.

Higher mortgage rates could result in buyers being priced out of the market and a tightening of lending standards. To mitigate risks, lenders may require larger down payments or higher credit scores. Potential homebuyers are advised to secure mortgage pre-approval and consider options like FHA loans.

Sellers may need to lower prices or offer incentives to attract buyers in a market with higher mortgage rates. Amid economic uncertainty and falling consumer confidence, buyers and sellers may choose to wait it out, while building up emergency funds to cover potential higher costs.



Read more at Yahoo Finance: China may make a ‘retaliatory’ move that experts say will ‘hit’ US homeowners ‘hard.’ Here’s what’s happening