Here is How China Could Sabotage the US Housing Market
According to CNBC, mortgage rates have seen a significant spike this week, primarily due to a swift selloff of U.S. Treasury bonds by investors.
This selloff, which affects the yield on the 10-year Treasury, is impacting various markets, including the crucial housing market. Some experts believe that this surge could be a direct result of growing tensions between the U.S. and other global powers, particularly the response to President Donald Trump’s tariff policies.
A Possible Retaliatory Move from China and Foreign Investors
The situation has grown more complex, especially with the possibility of China—one of the largest holders of U.S. mortgage-backed securities (MBS)—selling off its holdings in retaliation against the U.S. trade policies. China has already started reducing its MBS holdings, with a drop of 8.7% in 2022, which could lead to even more significant impacts on the housing market.
Mortgage experts are concerned that if China and other foreign countries like Japan and Canada decide to sell off their holdings at an accelerated pace, mortgage rates could rise further, affecting the affordability of home loans. This possibility of “widening spreads” between mortgage rates and Treasury yields has investors on edge, as it would make borrowing costs significantly higher for potential homebuyers.
Pressure on the Housing Market Amid Economic Uncertainty
The U.S. housing market was already facing challenges due to high home prices and consumer concerns. The ongoing volatility in the stock market and the potential for job losses has only exacerbated these fears. According to a recent Redfin survey, 20% of potential homebuyers were even selling stock to finance their down payments, highlighting the strain on consumers.
Meanwhile, the Federal Reserve’s decision to let its MBS holdings roll off its balance sheet is adding another layer of uncertainty. In previous economic crises, the Fed stepped in to buy MBS and keep rates low, but with its current strategy, it could be contributing to the upward pressure on mortgage rates.
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work at Coindoo has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.
