How the rapid run-up in Treasury yields could drive housing, auto loan costs higher

The rapid run-up in Treasury yields could hit American consumers hard, raising borrowing costs across housing and auto loans and potentially hammering the stock market.Global bond markets have been selling off as investors fear a prolonged war with Iran could drive inflation even higher, possibly swaying the Federal Reserve to hike interest rates.Treasury yields are the annual interest rates that investors are paid for holding government debt, and they are inversely linked to prices.As traders dump government bonds, yields move higher.The 10-year US Treasury yield rose to 4.798% Wednesday – hitting its highest level since November 2023.While the bond sell-off may sound like a Wall Street event, “it can quickly become a Main Street problem” said Mark White, wealth advisor at Mark White Wealth Advisors.“Overall, higher yields reward savers but penalize borrowers – and households preparing to buy a home, finance a car or carry revolving debt are likely to feel the impact most,” he told The Post on Wednesday.Mortgage rates, for example, are closely tied to the 10-year yield, which means an already-struggling market could find itself shutting out even more prospective buyers.Historically low inventory around the country has pushed asking prices out of reach for many, especially younger, first-time buyers. Four years of elevated borrowing costs have kept the market essentially frozen, since homeowners who clinched low interest rates are reluctant to move and give up a good deal.Mortgage rates briefly dipped below 6% in February – but they quickly rebounded after the US and Israel launched strikes on Iran. As of last Friday, the 30-year fixed mortgage rate was 6.66%, according to Freddie Mac.Even a modest increase in mortgage rates can add hundreds of dollars to homeowners’ monthly payments and reduce their spending power elsewhere, White noted.Higher rates also hurt the rental market, since developers will be discouraged from building – keeping supply...