Tag Archives: Government Shutdown

Recent Government Activity And Its Effect On Mortgage Interest Rates

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mortgage rateAMortgage rates typically are tied more to the yields on the 10-year Treasury note more than any other indicator. With the government in flux as the shutdown happened and ended, mortgage rates are also changing.

Overall, mortgage rates have decreased because of a lack of confidence in the government’s ability to get its finances under control.

Although rates spiked in September when the Fed hinted that they would not be purchasing as many bonds, they quickly released an announcement that they would actually be maintaining their current purchasing habits.

The Time Is Ripe For Homeowners

Since then, mortgage interest rates have been dropping back down to their previous levels. With 30-year and 15-year fixed mortgage rates continuing at very low levels, the time is ripe for homeowners to purchase or refinance.

In the day following the reopening of the government, mortgage rates continued at their low levels, which surprised some economists. The stock market went down and yields on the 10-year Treasury note also decreased, which both suggest a lack of confidence in the government.

Despite their ability to come to an agreement, investors and economists note that it is just a temporary fix, and there will likely be anothershowdown looming. Rates may remain low for a little while, but as the government begins releasing more economic data, mortgage interest rates could increase if the data shows growth in the economy.

Buyers Expect An Increase Of Applications

The government shutdown did have an effect on the volume of applications for government mortgages, like FHA and VA loans. Both reached a six-year low, largely because there were no staff on hand to answer questions over the phone and the offices were running on skeleton crews.

As the offices are back up and running again, buyers are expected to increase their volume of applications because those who had been delaying their applications now need to get the ball rolling on their home purchases.

Amidst all of the uncertainty, one thing is quite clear. It’s unlikely that interest rates will drop significantly lower than they are now, so buyers looking to get a mortgage and homeowners looking to refinance may be best off locking a rate soon rather than waiting.

What’s Ahead For Mortgage Rates This Week – October 21, 2013

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mortgage rates3Many of the economic and housing reports typically scheduled were delayed by the federal government shutdown.

The National Association of Homebuilders Wells Fargo Housing Market Index for October was released Wednesday with a reading of 55, lower than the projected 58 and previous month’s revised reading of 57. The original reading for September was 58, which was the highest measure of builder confidence since 2005.

NAHB cited concerns over mortgage rates and the federal government shutdown and its consequences as reasons for homebuilder confidence slipping.

While the NAHB HMI reading was lower than last month, it remains in positive territory as any reading over 50 indicates that more home builders are confident about housing market conditions than those who are not.

Pent-up demand for homes is fueling home builder confidence, which grew by 34 percent over the past year and exceeded the rate of home construction growth.

NAHB Releases Housing Starts Data For September

The Census Bureau was unable to release data on housing starts for September. NAHB released a report estimating September housing starts would be approximately 900,000 units on a seasonally-adjusted annual basis.

Single family home construction is expanding while multi-family home construction remains volatile. The NAHB report estimates single-family housing starts for September at between 620,000 and 630,000 homes annually.

Fed Beige Book: Residential Real Estate Improved, 4 Districts Report Slower Growth

The Fed released its “Beige Book” survey of its 12 banking districts on Wednesday. eight districts reported little or no change in economic conditions and 4 districts reported slower economic growth for September and October.

Real estate and home construction were improved, although several Fed districts reported concerns over rising mortgage rates.  The Beige Book report was based on data gathered October 7, one week after the government shutdown began.

Mortgage Rates, Weekly Jobless Claims Jump

Freddie Mac reported increases in average mortgage rates; the rate for a 30-year fixed rate mortgage was 4.28 percent with discount points unchanged at 0.70 percent.This was five basis points higher than the previous week.

The rate for a 15-year fixed rate mortgage rose by two basis points to 3.33 percent. The average rate for a 5/1 adjustable rate mortgage rose by two basis points to 3.07 percent. Discount points for both 15 year mortgages and 5/1 adjustable rate mortgages were unchanged at 0.70 percent and 0.40 percent respectively.

Weekly jobless claims reported on Thursday rose from the prior week. 358,000 new jobless claims were filed as compared to the expected number of 335,000. During the prior week, 373,000 new jobless claims were filed. The latest data was from the week of October 7, the second week the government was shut down.

What‘s Ahead: Delayed Government Data Expected

Some federal agencies have given dates for releasing data delayed by the shutdown. These included Nonfarm Payrolls and the Unemployment rate for September, which are set for release October 22. The Consumer Price Index and Core CPI for September are scheduled for October 30.