The Shutdown and Debt Ceiling
Tuesday marked 8 straight days of the government shutdown, and with an unpredictable end and a looming national debt default, the market is hunkering down and bracing for a big economic storm.
October 17th is the deadline for the two political parties to come to terms and make a decision on the debt ceiling, and it doesn’t look too good. With the two main political parties having reached an impasse, the market is showing that it has little faith that a resolution will happen soon and that it will be good for the economy. Stocks have been falling at a fairly consistent rate since September 18th. But some worry the market’s reaction isn’t big enough to push the politicians “into gear” to finally reach an agreement.
With all this economic uncertainty, mortgage interest rates have had very interesting reactions. While the stock market has been declining steadily, interest rates have been improving, up until monday. Now it appears that rates have started making a switch and are moving higher. It’s unclear what will happen with rates, but until politicians can come up with a solution that will be beneficial for the economy, rates may likely continue to rise.
The Mortgage Industry
Despite the government shutdown, mortgages are still funding everyday - and on time! VA, FHA, and conventional loans are being processed almost the same way they have always been and most of the time you won’t even notice a difference.
In some cases, if you have unusual circumstances that would require your lender to talk to representatives in FHA offices, your loan will most likely be delayed because they are working with a severely reduced staff.
Unfortunately, USDA loans are at a complete standstill until the shutdown is over. In fact, you cannot even access the website. But USDA loans make up such a small percentage of the total amount of loans, that it has little impact on the mortgage industry.
Overall, it’s a bad time for your stocks, but a great time to buy a home or refinance if you haven’t done it in the last year. Rates are the lowest they’ve been since the spike that started in May, and the amount of homes available for purchase is growing everyday.