US default could raise mortgage rates

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by TONYA MOSLEY / KING 5 News

KING5.com

Posted on July 30, 2011 at 5:20 PM

Updated Saturday, Jul 30 at 5:27 PM

SEATTLE – People trying to buy or sell homes are closely watching the debt ceiling debate on Capitol Hill. If a deal isn’t reached soon, the real estate market could be put in a tough position because mortgage rates could spike.

Real estate agents say they’ve seen a dip in interested buyers the past few weeks, and some of them attribute it to the debt crisis.

"Buyers are right now sitting on the fence because of what's going on in Washington,” said ReMax agent Jeff Menday.

Mortgage experts say rates could hike three percent.

"Most people don't realize that's the big money saver, not the $10,000 you weigh holding out for on the home. It’s the 30 years at saving $120 a month, is the biggie,” said Stewart Karstens with Windermere.

Anthony and Sara Carroll realize it, and they are racing to find something before the default deadline.

"As the clock has been ticking, we've been thinking we really need to go and we've been getting more desperate as we go along,” said Anthony.

Menday has a piece of advice.

"They're saying that if our credit rating goes bad in Washington that rates are going to go up above five percent or above. So, now is the time to go buy something and lock in,” said Menday.

He’s not selling as many houses, but something else makes him even angrier.

"They're dealing with people's lives here. They're posturing, trying to make a name for themselves but there are definitely people that this affects,” said Menday.

A mortgage expert says even if a deal is reached before the Tuesday deadline, rates could continue to rise because a higher debt ceiling could devalue the U.S. dollar.

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