Mortgage rates jumped higher on Monday following Moody's downgrade of U.S. debt, adding to the headwinds facing homebuyers.

The downgrade of the U.S. sovereign credit rating Friday will likely mean higher borrowing costs on mortgages.

The dip in the U.S. credit rating indicates that ratings agencies believe the government is at a higher risk of default on its debt. While the U.S. rating still remains relatively high, the decrease may make investors more hesitant to lend to the government, and demand higher compensation for lending in the form of higher interest rates.