The Federal government returned to work last week but without a resolution to the ongoing budget stalemate or the continued problem of the need to raise the debt ceiling, both of which are temporarily fixed until mid-January and early February. The lack of a long-term resolution means more uncertainty for the U.S. economy and, therefore, a likelihood of low mortgage rates for at least the next few months.
According to HSH.com, last week the overall average rate for a 30-year fixed-rate home loan rose by just three basis points (0.3 percent) to 4.45 percent. Average rates for 15-year fixed-rate mortgage loans rose by just two basis points (0.02 percent) to 3.57 percent. Rates for FHA-insured, 30-year fixed-rate home loans declined by five basis points (0.5 percent) to an average rate of 4.02 percent. The average rate for a 5/1 Hybrid Adjustable Rate Mortgage (ARM), declined by three basis points (0.03 percent) to an average rate of 3.15 percent. Compare mortgage rates for your area before refinancing or applying for a purchase loan.
The government shutdown's economic impact is still being evaluated, but one definite result of the shutdown is the lack of clear data on how the economy is performing, information the Federal Reserve needs to make a decision about tapering their mortgage purchases. The most recent Federal Reserve's "Beige Book" reported modest to moderate economic growth, not enough growth to indicate a rapid policy change.
The mortgage experts at HSH.com anticipate that mortgage rates will decline at the beginning of this week and will likely drop further by the end of the week unless some more positive economic reports are released.
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