Mortgage rates have remained relatively stable in the past few days amid political turbulence, as the U.S. Congress has struggled to pass proposals to fund the government and end the shutdown, now in its seventh day.
On Tuesday, HousingWire’s Mortgage Rates Center, which tracks locked loans, showed that 30-year conforming loan locks averaged 6.38%—four basis points (bps) higher than a week ago but unchanged over the past five days. Jumbo 30-year rates rose 5 bps compared to the prior week to 6.29%, while FHA 30-year loans remained up 1 bps to 6.2%.
Government shutdowns can influence mortgage rates through investor perceptions of the economy. Their moves impact the 10-year Treasury market, which is historically correlated with 30-year mortgage rates due to their long-term horizon.
The shutdown can also complicate access to official data, including reports the Federal Reserve uses to guide its decisions on the benchmark interest rate.
“Last week was jobs week, but with the government shutdown, we didn’t have the final job reports for the week, which included jobless claims on Thursday and the big BLS jobs report on Friday, which the Fed tracks so closely,” Logan Mohtashami, Lead Analyst at HousingWire, wrote. “The 10-year yield didn’t have too much of a crazy week and ended the week at 4.12%.”
Mohtashami, who projects mortgage rates between 5.75% and 7.25% in 2025, said that spreads between mortgage rates and the 10-year Treasury yield have been the best story for rates this year.
“At one point this year, we were just 0.35% away from normal spread levels, and we reached 0.2% away from my peak improvement forecast for 2025 for mortgage spreads,” Mohtashami added.
Investors’ moves
According to Cotality chief economist Selma Hepp, during shutdowns, investors typically flock to Treasury securities, pushing yields down and potentially resulting in slightly lower mortgage rates — usually a drop of about 0.125 to 0.25 percentage points.
“Still, this isn’t a given, and other market factors can muddy the waters,” Hepp said in a statement.
Realtor.com senior economist Jiayi Xu said in a statement that the timing of the shutdown is “particularly sensitive” since it came after the Fed cut rates for the first time in nine months. On Sept. 17, the Fed lowered its benchmark interest rate by 25 bps, setting the target range at 4% to 4.25%.
“The Fed is now awaiting critical economic data — such as employment reports and inflation figures — to guide its next steps, but these releases are highly likely to be delayed. Fortunately, because the Fed operates independently, the shutdown will not affect the timing of its next meeting, even if the disruption continues through the end of the month,” Xu said. “Still, the longer the shutdown drags on, the greater its potential influence on markets and monetary policy decisions will be.
Xu expects mortgage rates to remain within “a tight range during the shutdown unless other unexpected developments emerge.”
Melissa Cohn, regional vice president of William Raveis Mortgage, said that mortgage rates initially won’t be impacted by the shutdown. But “if it drags on, then investors will raise fears about the credit quality of U.S. debt, bond yields could go higher and mortgage rates will increase,” she added in a statement.
On Monday, Senators failed to strike a funding deal for the fifth time. In the mortgage industry, Fannie Mae and Freddie Mac waived some loan requirements, while the Federal Housing Administration (FHA) said it will continue to process claims but cannot endorse new Home Equity Conversion Mortgage (HECM) until funding is restored.