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Rising mortgage rates are fueled by investors selling U.S. Treasury bonds, potentially exacerbated by foreign countries, particularly China, offloading agency mortgage-backed securities (MBS) in response to U.S. trade policies. China's MBS holdings have already decreased significantly. This, combined with the Federal Reserve's MBS portfolio reduction and weakening consumer confidence, threatens the already struggling spring housing market, potentially leading to even higher mortgage rates and further market instability.

Prepared by Christopher Adams and reviewed by editorial team.