U.S.-Iran Tensions Could Cause Issues For The Mortgage Industry
Tensions between the U.S. and Iran are high following the killing of a top Iranian military leader. While interest rates are currently down again, the mortgage industry as a whole could feel some pretty big impacts should tensions boil over.
"An increase in competition for bonds such as mortgage-backed securities means investors have to accept lower returns, which results in cheaper rates for home loans. The U.S. 10-year Treasury note, which acts as a loose benchmark for mortgage rates, sank on Friday," according to HousingWire.
"Even if mortgage rates stay low, or head lower, a war with Iran wouldn’t be a boon for the lending and housing markets long-term."
The threat of war could have potential buyers holding off on larger purchases like a home. Therefore, the need for a mortgage would be significantly low all around.
Buyers would be pinching their pockets as expenses for everyday necessities such as gas would also increase.
"If it becomes expensive, if the government is borrowing more and more money, that would mean we’d see higher mortgage rates," said Mark Goldman, a loan officer with C2 Financial Corp. based in San Diego, according to HW.
To learn more about the potential impacts that a war would have on the mortgage industry, click on the image above.