Home-buying costs could soar 22% if US defaults on its debt
SEATTLE, May 11, 2023 /PRNewswire/ -- The U.S. government defaulting on its debt, which could become a reality as soon as June 1 without intervention, could send the typical cost of a mortgage soaring by 22%. Mortgage rates rising above 8% would likely overwhelm a small price dip to make affording a home an even steeper hill to climb and send home sales tumbling, according to a new Zillow® analysis.
- To be sure, the U.S. has never before defaulted on its debt, and it is very unlikely that the U.S. will fail to pay its debts now.
- "Home values might not see a notable drop, but higher mortgage rates would severely impair affordability, for first-time buyers especially.
- A debt default would almost certainly mean severe disruption for the economy, with the ripple effects taking their toll on the housing market.
- Even in this pessimistic scenario, home values are expected to rise 1% from today to the end of next year.