Thanks to their great big beautiful tax bill, the cost of buying a house is going up. Republicans talk a good fiscal conservative game, but they are worse than the Democrats when it comes to spending more than revenues.
Mortgage rates climbed on Thursday on the heels of the latest U.S. credit downgrade, which pushed the 10-year Treasury yields higher this week—as President Donald Trump‘s”big, beautiful” spending bill just squeaked by in the House.
The average rate on 30-year fixed home loans increased to 6.86% for the week ending May 22, up from 6.81% last week, according to Freddie Mac. Rates averaged 6.94% during the same period in 2024.
The credit rating agency Moody’s on Friday downgraded the U.S. credit rating from the gold-standard AAA status to AA1, citing mounting concerns over the federal government’s ballooning debt, currently topping $36 trillion.
Moody’s decision, coupled with lingering doubts concerning Trump’s tariff policies, raised questions about whether U.S. Treasury remains a safe haven for investor dollars.
As a result, yields climbed as investors reassessed the risk of holding U.S. debt, according to Realtor.com® economist Jiayi Xu. Because mortgage rates typically mirror the 10-year yield’s trajectory, this upward movement translated into higher borrowing costs for homebuyers.