Good morning wonderful professionals, I hope everyone is well.
**Disclaimer, this is NOT a political post**
Is U.S. housing market stability an illusion?
Recent analysis from CNBC raises pressing concerns.
China, a principal foreign holder of U.S. mortgage-backed securities (MBS) may begin divesting these assets should trade tensions escalate under new U.S. tariffs. Such a move would likely widen spreads, drive mortgage rates higher, and place additional strain on an already fragile spring housing market.
With nearly 20% of buyers currently liquidating stock holdings to fund down payments, even a modest uptick in borrowing costs could sharply diminish purchasing power and trigger a broader correction in home prices.
The risks extend beyond housing.
A large-scale sale of U.S. Treasuries or a strategic devaluation of the yuan could reverberate across global financial markets, tightening liquidity and amplifying economic volatility.
In today’s interconnected environment, global macroeconomic shifts can rapidly translate into local market disruptions.
Prudent investors and market participants should consider strategic positioning to mitigate emerging risks.
At the end of January 2025, foreign countries owned $1.32 trillion worth of U.S. mortgage-backed securities, or 15% of the total outstanding, according to Ginnie Mae.
www-cnbc-com.cdn.ampproject.org/c/s/www....-housing-market.html
