Lawrence Yun, Chief Economist with the National Association of Realtor warns what to expect if the federal government fails to increase its borrowing authority prior to when the U.S. Treasury says it will run out of money to pay its bills. The government could decide to pay the interest on its debt, which is about 3% of the GDP, and ensure that global investors of U.S. Treasury bonds are made whole. That would help protect the dollar as the world reserve currency. But to do that, the government would have to curtail spending elsewhere.
Yun says that home sales would be expected to drop by 350,000 to 450,00 units for each 100 basis-point increase in mortgage rates.
In a four minute video, Yun talks about the looming debt crisis in an interview with REALTOR Magazine. To watch the video and see the full story Click here