Mortgage rates rose during government shutdown
Posted on Thursday, October 17, 2013 at 10:10:02 AM
Residential financing rates swung upward recently, while the budget impasse in Washington, D.C., made a number of people across the U.S. concerned about the economy.
The 30-year fixed-rate mortgage averaged 4.28 percent over the past week, when the uncertainty over the U.S. government shutdown was at its highest, according to Freddie Mac. That is slightly higher than last week's 4.23 percent. Now that a resolution has been met, changes could reflect a more positive atmosphere.
"Fixed mortgage rates edged up leading to the federal budget deadline this week," said Frank Nothaft, vice president and chief economist of Freddie Mac. "Recent confidence measures depict some of the effects of the government shutdown and uncertainty of the budget impasse. For instance, consumer sentiment in October fell for the second straight month to the lowest reading since January, according to the University of Michigan."
Additionally, the 15-year fixed rate mortgage averaged 3.33 percent, a small increase from last week's 3.31 percent.
If the U.S. government couldn't reach an agreement to end the shutdown, residential financing rates could have increased even higher, according to MarketWatch. The Wednesday, Oct. 16 deadline for the U.S. to default on its debt was approaching, and that possibility could have wreaked havoc on the economy.
Instead, the worst-case scenario was avoided due to a deal signed early Thursday. That could signal a slight decline in rates of the next couple of weeks, as the economy may stabilize.