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China T-bill shift to upset US mortgages

Talk of China diversifying foreign investments this year has mortgage industry watchers worried a slow-down on US Treasury purchases may drive interest rates up and cool a robust real estate market, AP reported . Ken Hackel, chief fixed income analyst at RBS Greenwich Capital Markets, believes there could be fewer purchases of five- and 10-year US government notes at regular auctions. "If long-term Treasury yields are higher, that means that mortgage rates will become more expensive for consumers," said Frank Nothaft, chief economist at Freddie Mac.

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