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As the Aug. 2 deadline nears for the U.S. Congress to raise the debt ceiling or allow the nation to default, the national media are focused on how catastrophic the latter possibility could be.

But local experts say the talk about supposed Armageddon effects is more political posturing than actual foresight.

Popular opinion among financial and real estate professionals around the Portland area is that the debt ceiling will be raised as it always has been and borrowing will continue. Otherwise, they say, interest rates will begin to creep up from record lows and the already slow-moving economy will shift into an even lower gear.

鈥淚t’s political theater,鈥� local economist and consultant Bill Conerly said. 鈥淭he default, I think, is unlikely and I would be surprised if they didn’t raise the debt ceiling.鈥�

Republicans want to shore up spending, and default could spur such action. However, lawmakers could face backlash if the country were to default.

鈥淚 just can’t imagine we’d do that to ourselves,鈥� said John Petersen, head of the capital group at local development firm Melvin Mark. 鈥淚f it does happen, we ought to recall everyone currently in political office.鈥�

If the debt ceiling, set at $14.29 trillion, isn’t raised by Congress, then the federal government would no longer be allowed to borrow money to meet financial obligations such as bonds and Social Security. Once payments stop, those debts go into default 鈥� in much the same manner when a homeowner stops making mortgage payments.

Treasury yields would then rise, and because most financing is based on 10-year Treasurys, Petersen said, interest rates would rise. Some professionals around Portland predict that rates would increase 1 or 2 percent.

鈥淥ur advice is that if you can get financing right now you should move quickly and go for it,鈥� Petersen said.

But Randy Sebastian, owner of Renaissance Homes, said interest rates aren’t the barrier to securing financing right now.

鈥淲e’ve always monitored interest rates closely because it has an impact on what we do,鈥� said Sebastian, one of the leading new home builders in the Portland area. 鈥淏ut right now home sales just aren’t being driven by interest rates.鈥�

New homes already cost less than in the past because of cheaper land and materials, he said. But people now are buying homes only because they need to live in a new location, or because they have extra money, he said.

鈥淲hen we first went into this economy we thought interest rates being low would drive things back up,鈥� he said. 鈥淏ut now we’ve realized that if rates pop up it’s not going to really change all that much.鈥�

Gerry Mildner, director of Portland State University’s Center for Real Estate, said the rise in interest rates would affect homeowners with adjustable rate mortgages. It’s likely, he said, that another wave of foreclosures or distressed properties could result, and further slow the recovery.

Other negative effects of a default could be a rise in inflation, volatility in the money markets and the potential loss of the nation’s AAA credit rating.

鈥淗opefully sanity will prevail, and leaders in Congress and the administration will come to a consensus,鈥� Mildner said.

But Mildner added that choosing not to default isn’t a win for the nation. If the debt ceiling is raised and the government is allowed to keep borrowing, it will simply become further leveraged.

鈥淚t’s a bit of a nuclear argument,鈥� he said. 鈥淭he usual habit of Congress is to kick things down the road and let someone else deal with it. That isn’t going to make the situation better.鈥�

Petersen agreed. No matter what happens, he said, the federal government is going to have to make some changes.

鈥淚ronically, after all the stuff we’ve talked about over the past few years with people needing to shore up their finances, it’s now the government’s turn,鈥� he said.