Mortgage rates are still hovering above 6%, home prices keep rising, and now a government shutdown is threatening to make an already unaffordable housing market even worse. Zillow and housing analysts are sounding the alarm.
Mortgage rates remain elevated
As of October 8, 2025, mortgage rates are holding steady at high levels:
- 30-Year Fixed: 6.125%
- 15-Year Fixed: 5.375%
- 7-Year ARM: 6.375%
Rates like these continue to keep many buyers on the sidelines, especially first-time homebuyers and lower-income households. Even a small rate increase can raise monthly payments by hundreds of dollars.
Home prices rise despite affordability crisis
According to the latest data:
- U.S. home prices are up 60% since 2019
- Median single-family home price reached $427,800 in August 2025
- That’s five times the median household income, well above the historic 3:1 affordability ratio
Prices are increasing across all four regions and in 88 of the top 100 U.S. metro areas. Harvard researchers say homebuying has dropped to its lowest level since the mid-1990s due to high prices and interest rates.
New concern: Government shutdown disrupts the market
Zillow warns that the federal government shutdown that began October 1 could cause serious ripple effects in the housing and mortgage systems.
Here’s how it could hit the market:
- Federal workers facing furloughs may miss mortgage or rent payments
- Over 2,500 daily mortgage applications tied to federal programs could be delayed or halted
- FHA and VA loan processing may grind to a standstill
- Closings could be delayed, risking escrow losses, expired rate locks, or canceled deals
- Rental aid and homelessness grants could slow as HUD staff are furloughed
According to Zillow’s chief economist Orphe Divounguy, this shutdown could “expose marginal households to cost burdens overnight.”
Who’s hit hardest?
The effects won’t be evenly spread. Low- and moderate-income households — already stretched thin — are most at risk:
- Buyers using government-backed loans (FHA, VA, USDA) may see deals fall apart
- Those relying on Housing Choice Vouchers could face delays or disruptions
- Renters and buyers in already high-cost markets will feel added pressure
The longer the shutdown continues, the deeper the impact, especially for households that can’t absorb delays or income loss.
How to lower your mortgage rate
For buyers still trying to navigate the market, here are three key strategies to secure better rates:
- Boost your credit score: A higher score unlocks better offers
- Make a bigger down payment: Reduces lender risk and your rate
- Lower your debt-to-income ratio: Shows you can handle a mortgage responsibly
Zillow’s BuyAbility℠ tool also lets you estimate your custom rate based on your income, credit, and location.
Should you lock in now or wait?
With mortgage rates stuck above 6% and uncertainty from the government shutdown, locking in now could protect against further volatility — especially if your loan depends on federal agency processing.
Fannie Mae has predicted a “major mortgage rate shakeup” soon, but timing remains unclear.