Mortgage rates topped 7% again after U.S. credit rating downgrade

环球市场播报2025-05-20

InMoody'sMortgage rates climbed sharply on Monday after weeks of stagnation following the decision to downgrade the U.S. credit rating.

Following the announcement last Friday night, bond yields rose, while mortgage rates roughly followed the 10-year Treasury Bond yield.

The average rate on the popular 30-year fixed loan reached 7.04% on Monday, the highest level since April 11, according to reports.

Matthew Graham, chief operating officer of Mortgage News Daily, said: "Ordinary mortgage lenders not only have to consider market movements at Friday's close, but also the additional weakness that emerged this morning. This led to a significant one-day increase in interest rates, but it did not change the overall situation much."

The surge in mortgage rates in April had a direct impact on the housing market, causing it to fall into a slump during the usually busy spring sales season. According to real estate website Realtor.com, the number of existing homes available for sale in April decreased by 3.2% compared to April of last year, based on signed contracts.

Homebuilders also noted a sharp drop in demand in April. According to the National Association of Home Builders' monthly index, the homebuilder confidence index is currently at its lowest level since late 2023.

According to the Mortgage Bankers Association of America’s weekly index, mortgage demand from homebuyers picked up in the first two weeks of May, but interest rates were just around 6.9% at the time. Recently, homebuyer demand has slowed significantly whenever interest rates exceed the 7% threshold. Furthermore, any rise in interest rates could even disqualify some people from obtaining mortgages.

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Editor: Ding Wenwu

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