A mixed picture emerged in mortgage rates one day after the start of the U.S. government shutdown, while a release of new jobs data raises concerns about the nation's economic picture.
Ten-year Treasury yields, whose movements typically influence the direction
Treasurys saw much of their backslide occur after early Tuesday, when they opened at 4.15%, and maintained its decline into today. While the downward momentum picked up on the same day the
While yields were down, "surprisingly, the mortgage market showed little reaction to the ADP employment report," said Kara Ng, senior economist at Zillow Home Loans in a statement published on Wednesday.
Freddie Mac's weekly Primary Mortgage Market Survey showed the average 30-year rate at 6.34% on Thursday, Oct 2. The average
The 15-year fixed rate likewise climbed up 6 basis points week over week to an average of 5.55%. The average increased from 5.49% seven days earlier and finished 30 basis points higher from year-ago levels.
On the other hand, Zillow's platform showed the 30-year fixed average at 6.51% on Thursday, which represented an 8 basis point drop from 6.59% reported a week ago. The average rate rose, though, by 3 basis points between Wednesday and Thursday.
The 30-year fixed rate according to
What role the government shutdown could play in rate movements
A variety of factors account for why recent mortgage rate movements might appear muted despite elevated political and
While the Federal Reserve slashed its funds rate at its September governors meeting, some forward-looking investors had priced in a larger reduction and were left "disappointed" the central bank's decision did not align with expectations, Ng said. Rates subsequently jumped, with Freddie Mac's survey showing the 30-year average higher for the second week in a row.
The same similar forward-looking sentiment also means investors had factored in the effects of a government shutdown, which many
"I wouldn't necessarily say that traders were trading into the shutdown. I think they would have already made those bets in the last week," said Foundation CEO Marc Halpern.
If the shutdown extends longer than expected, mortgage rate movements will become difficult to predict, according to Chelsea Wagner, executive vice president of revenue at Lower.
"When we have uncertainty, it's going to cause volatility. Depending on how long this lasts, I think we can expect some volatility to come in the market. But if we step back in the next couple of days or a week, I think things will remain pretty steady," she said.
For potential home buyers, the market holds some opportunity under current conditions, with the current week's 30-year rate still well below its average over the past year, according to Freddie Mac.
"The last few months have brought lower rates and as indicated by the recently reported increase in pending home sales, homebuyers are feeling more confident to get into the market," said Freddie Mac Chief Economist Sam Khater.
"Although affordability remains challenging, buyers currently have greater negotiating power than in previous years. Homes are staying on the market longer, giving potential buyers additional time to evaluate their choices," Ng concurred.
However, she also raised a note of caution. "Buyers, however, shouldn't assume these conditions will last indefinitely. New listings reached a historic low in August, driven by hesitant sellers amid sluggish demand."
