Mortgage rates often mirror the yields on the 10-year Treasury note more than any other indicator. As the government shutdown has come and gone, at least for now mortgage rates have decreased due to a lack of confidence in the government and the uncertainty that looms in the future.
Although rates spiked in September when the Fed hinted that they would not be purchasing as many bonds, they quickly released an announcement that they would actually be maintaining their current purchasing habits.
A Second Chance For Homeowners
With the recent decline in mortgage rates, we are seeing rate levels well below the highs seen in July. With mortgage rates approaching previous lows, the time is ripe for homeowners to purchase or refinance.
In the day following the reopening of the government, mortgage rates did not spike as many economists expected. The stock market went dropped and yields on the 10-year Treasury note also fell suggesting a total lack of confidence in the government and its impact on the economy.
Despite their ability to come to an agreement, it will be short lived as there is another showdown looming as the agreement was temporary. We will get to go through the same grandstanding early next year. Rates will likely remain low for now; however, as we saw in May mortgage rates can shoot higher unexpectedly on any sign of economic improvement and shift in Fed policy.