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| Image Source: dailyfinance.com |
Earlier this month, the news of the government shutdown also came with reports on the drop in the average for fixed mortgage rates in the US for the third straight week—the lowest it has been since early July. According to Freddie Mac, the average rate on the 30-year loan fell from 4.32 percent to 4.22, while the average on the 15-year fixed loan dropped from 3.37 percent to 3.29 percent.
The decline in rates started when the Federal Reserve continued its $85-billion-a month in bond buys instead of slowing down. Meanwhile, the shutdown made investors sell their stocks to buy Treasury bonds. Mortgage rates are affected by the yield on the 10-year Treasury note and the 10-year note traded lower in early October at 2.63 percent, down from the 2.71 percent in late September.
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| Image Source: dailymail.co.uk |
While rates may have dropped, potential homebuyers have problems looming over the horizon as the Federal Housing Administration, responsible for guaranteeing 30 percent of home mortgages in the US, will be unable to continue approving loans if the shutdown continues until it runs out of funding.
When that happens, many prospective homebuyers will be unable to purchase homes until the government reopens. Home sellers will also have to wait before they can sell off their property, and activity in the housing market may continue to be slowed until backlogs are cleared.
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| Image Source: usatoday.com |
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