Mortgage rates drop for third consecutive week

October 3, 2013

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In the face of a government shutdown, the effect on mortgage rates seems to have been small, as rates have dropped again for the third consecutive week.

According to Fannie Mae and Freddie Mac, interest rates for a 30-year fixed mortgage averaged 4.22 percent for the week ending on Oct. 3. For the previous week, rates were fixed at an average of 4.32 percent.

"With the onset of the federal government shutdown and declining consumer confidence, fixed mortgage rates fell for the third consecutive week," said Frank Nothaft, Freddie Mac's vice president and chief economist.

Lower mortgage rates are good news for first-time home buyers and those looking for the best mortgage refinance rates. However, the drop comes with the possibility that the shutdown will cause a temporary economic downturn.

"Consumer sentiment fell for the second month in a row in September to its lowest reading since April, according to the University of Michigan," stated Nothaft.  "Moreover, a recent Bloomberg survey of professional forecasters suggests that a partial federal shutdown lasting one week would shave 0.1 percentage points off of GDP growth in the fourth quarter and even more if the shutdown lasts longer."

The 30-year rate has reached its lowest level since June 10, 2013. By comparison, last year's rate for the week ending on Oct. 3 was at 3.36 percent, a record low. With uncertainty of where rates will go next, homeowners shouldn't wait to lock in a low rate mortgage.

"Markets (and lenders) [are] still digesting the DC drama and its impact on loans," Ted Rood, senior originator at Wintrust Mortgage, told Mortgage Daily News. "While MBS pricing improved slightly, [it] appears borrowers may not see a direct improvement with rates offered. Bottom line: if you're a buyer, rates are significantly better than last few months. Delaying your purchase risks both higher sales prices and mortgage rates."

Contact The Federal Savings Bank, a veteran owned bank, to discuss affordable mortgage options.