US Default Could Trigger Housing Market Correction and Mortgage Payment Surge, Warns Experts

Moody's Analytics chief economist Mark Zandi warns that if the US Treasury defaults, it could have broad economic consequences, with the housing market being one of the most vulnerable areas. Financial markets would put upward pressure on long-term rates like mortgage rates, which could go back above 7% if a default looked likely. This would accelerate the ongoing housing market correction, which lost some momentum this spring. Zillow predicts that if the US were to default, the average 30-year fixed mortgage rate would spike to a peak of 8.4% by September, while home sales volumes would fall 23%.