China’s Sell-Off Of U.S. Treasurys Could Hit Homeowners Hard

A potential Chinese sell-off of U.S. Treasurys could ripple through the housing market and push mortgage rates higher, according to CNBC, as reported by Vawn Himmelsbach for Moneywise.

U.S. mortgage-backed securities (MBS), 15% of which are held by foreign governments, could also be at risk of being dumped.

Mortgage rates typically follow the 10-year Treasury yield. If China accelerates its sale of U.S. Treasurys, that yield could spike—raising mortgage costs across the country.

U.S. mortgage-backed securities (MBS), 15% of which are held by foreign governments, could also be at risk of being dumped.

“If China wanted to hit us hard, they could unload Treasurys,” said Guy Cecala, executive chair of Inside Mortgage Finance. “Is that a threat? Sure it is.” Trump has already imposed 145% tariffs on Chinese goods; Beijing has responded with 125% tariffs on U.S. imports.

While the People’s Bank of China says it has no current plans to drastically alter its reserves, which stood at $3.24 trillion as of March, uncertainty looms.

“One single asset’s change in a single market will have limited impact,” said Deputy Governor Zou Lan. But should China or others offload U.S. Treasurys and MBS, the U.S. dollar could face a serious blow.