According to Frank E. Nothaft, vice president and chief economist at Freddie Mac, the government shutdown and the resulting decline in consumer confidence have caused fixed mortgage rates to fall for the third consecutive week.
“Consumer sentiment fell for the second month in a row in September to its lowest reading since April . . . Moreover, a recent Bloomberg survey of professional forecasters suggests that a partial federal shutdown lasting one week would shave 0.1 percentage points off of GDP growth in the fourth quarter and even more if the shutdown lasts longer,” said Nothaft.
Mortgage Applications Are Down as Well
The current government shutdown seems to have impacted the number of mortgage applications being processed as well. While homebuyers are still interested in near historic low rates, the shutdown is slowing lenders’ abilities to confirm borrower incomes and identities.
Indeed, the number of mortgage applications being submitted are showing a decrease this week, after a previous two-week uptick and analysts are saying they don’t expect to see much of a change over the next week.
Current Rates and Trends
Though its possible for rates to shift in either direction, many believe that the public’s uncertainty as to how long the government shutdown will last and exactly what services will be impacted, will continue to keep favorable rates in check.
The average rate on a 30-year fixed mortgage loan dropped a bit this week, down from 4.57 percent in early September, the average rate on a 30-year fixed is now at 4.22 percent, putting it at its lowest since June, according to the latest survey from Freddie Mac.
The average rate on a 15-year fixed loan also dropped for the third consecutive week, down from 3.59 (in September) to its current average at 3.29 percent.
Both rates are still up from last year.
