Mortgage Rates and the National Debt

mortgage rates

Mortgage rates are always an important factor in the strength of the U.S. economy.  That’s because the housing market accounts for a substantial portion of economic activity in the United States.  So mortgage rates and mortgage refinance rates are always of interest to U.S. consumers.  Since this site explores the consequences of America’s runaway National Debt, we thought it would be appropriate to explore the relationship between mortgage rates and the national debt.

Although there is no direct relationship between mortgage rates and the national debt, there is a substantial indirect relationship.  That’s because mortgage rates are largely influenced by bond rates, and bond rates are largely influenced by the amount of government borrowing.  So when the federal government is borrowing a lot of money, that puts upward pressure on bond rates, which in turn, puts upward pressure on mortgage rates. 

Why, then, are mortgage rates currently at such low levels when our national debt is at a record high?  That’s because the Fed is keeping interest rates artificially low right now to try to stimulate the economy, including the housing market.  But as the economy recovers, the Fed will have no choice but to raise interest rates.  When this happens, we are likely to see noticeably higher mortgage rates in the coming years.

If you considering getting a new mortgage or refinancing your mortgage, this is a good time to do it (assuming your financial situation allows you to do so.)  If you wait until the economy fully recovers, you are quite likely to see higher mortgage rates and mortgage refinance rates.

Thank you for visiting this site and reading this article on mortgage rates and the national debt.   Your interest in the national debt and related topics is very much appreciated, and you are invited to read additional articles on this site.