Moody's downgrades United States credit rating on increase in government debt

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12. Mortgage rates cross back over 7% after U.S. credit downgrade

Interest rates are going up due to the credit downgrade and concerns about increase deficits

Mortgage rates cross back over 7% after U.S. credit downgrade www.cnbc.com/2025/05/19/m... #residential #RealEstate #housing

— DeSota Wilson (@desota.bsky.social) 2025-05-19T20:07:57.125Z

https://www.cnbc.com/2025/05/19/mortgage-rates-us-credit-downgrade.html

After several weeks of sitting stagnant, mortgage rates surged higher Monday following Moody’s decision to downgrade the U.S. credit rating.

Bond yields rose after the late Friday announcement, and mortgage rates loosely follow the yield on the 10-year Treasury.

The average rate on the popular 30-year fixed loan hit 7.04% on Monday, according to Mortgage News Daily. That is the highest level since April 11.

“The average mortgage lender had to account not only for the market movement in Friday’s closing minutes, but also to the additional weakness seen this morning. That makes for a fairly big jump, day-over-day, but it does very little to change the bigger picture,” said Matthew Graham, chief operating officer at Mortgage News Daily.

The April surge in mortgage rates did have a direct effect on the housing market, causing it to pull back right in the heart of the usually busy spring season. Pending sales of existing homes in April, counted by signed contracts, dropped 3.2% compared with April of last year, according to Realtor.com.

Homebuilders also noted a steep drop in demand in April. Homebuilder sentiment is now at the lowest level since the end of 2023, according to the National Association of Home Builders’ monthly index.