A default on the nation's federal debt could erase the gains in the still-young housing recovery, National Association of Realtors president Gary Thomas said in his testimony before the Senate Committee on Banking, Housing and Urban Affairs Thursday. The NAR encouraged Congress to end the budget standoff and raise the debt limit to protect homeowners.
A default on the nation's federal debt could erase the gains in the still-young housing recovery, National Association of Realtors president Gary Thomas said in his testimony before the Senate Committee on Banking, Housing and Urban Affairs Thursday. The NAR encouraged Congress to end the budget standoff and raise the debt limit to protect homeowners.
"A default would be devastating for homeowners whose largest asset would lose value and equity, for home buyers who would see dramatic increases in interest rates and tighter credit standards, and for entire communities that are still grappling from the impact of the financial meltdown," Thomas told the committee. "As the leading advocate for housing issues, NAR is committed to protecting the value of homeownership from the avoidable and substantial harm that would be inflicted by Congress's inaction to avert a default."
Thomas said even a 1 percent increase in mortgage rates could lead to 450,000 fewer home sales and could price many middle-class Americans out of the housing market. For borrowers earning $60,000 and taking out a $200,000 mortgage, a 1 percentage point increase in interest rates would raise their monthly mortgage payments by 10 percent, a difference that could be costly to buyers and potentially disqualify them from many lending programs, he testified.
