Moody’s Downgrade of U.S. Credit Rating
Moody’s has downgraded the U.S. credit rating from Aaa to Aa1, citing rising federal debt and long-term budget concerns. While the U.S. remains a global economic anchor, this shift signals increased risk—and that can affect your bottom line.
Mortgage Rates Under Pressure
The downgrade pushed Treasury yields higher, with the 30-year bond yield topping 5% and the 10-year passing 4.5%. Since mortgage rates closely follow long-term Treasury yields, borrowers are already feeling the effects. As of mid-May, 30-year fixed mortgage rates were averaging 6.92%—and could climb further.
If you're in the market to buy or refinance, rising rates could limit affordability or reduce how much home you can qualify for. Timing and strategy matter more than ever in this kind of rate environment.
Other Impacts: Credit Cards, Auto Loans, and the Fed
While mortgage rates are tied to bond yields, credit card and auto loan rates are influenced by the Federal Reserve's benchmark rate—currently between 4.25%–4.5%. The downgrade makes it harder for the Fed to cut rates, meaning high interest charges on consumer debt are likely to stick around. The average credit card APR remains near 20%, with little relief in sight.
Bottom Line
A lower U.S. credit rating means borrowing costs across the board may keep rising. For homebuyers, that means acting sooner could save thousands over the life of a loan.
Ready to lock in your rate before they climb higher? Let’s talk about your options and find the right mortgage solution for your needs.
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