Interest rates on credit cards, auto loans and mortgage rates could skyrocket.īy increasing the debt ceiling, the Treasury can borrow funds to pay for government obligations, such as Social Security and Medicare benefits, tax refunds, military salaries, and interest payments on national debt. defaulting on its bills could cause “irreparable harm” to the U.S. If so, the federal government is at risk of defaulting for the first time in U.S. could be incapable of paying its debt as early as June 1. In a letter to Congress, Treasury Secretary Janet Yellen said the U.S. That means the federal government cannot currently increase the amount of its outstanding debt, and paying the nation’s bills becomes more complicated. hit its current borrowing limit of $31.4 trillion in January. Start here What is the debt ceiling?Īlso known as the debt limit, the debt ceiling represents the maximum amount of money that the United States Treasury can borrow to pay the nation’s bills.
Read on to learn more about the debt ceiling and its impact on the housing market and mortgage rates. Many homeowners and potential home buyers hope this means lower interest rates as we head into summer.
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The economy’s resilience and uncertainty surrounding the debt ceiling negotiations caused mortgage rates to climb, according to Freddie Mac Chief Economist Sam Khater. With the national default deadline looming, the federal government reached an agreement to raise the debt ceiling.
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