Mortgage Rate Update October 10, 2013

Mortgage rates are slightly worse this morning on developments regarding the partial government shutdown.

House Republicans have reportedly created a plan that they will unveil later today that would increase the nation’s borrowing limit for 6 weeks and allow for more time to negotiate.  President Obama has signaled he’s open to the temporary fix.  As a result, some of the fear and anxiety which had helped mortgage rates achieve multi-week low levels has come out of the market.

We'll see if lawmakers can make a deal to delay the partial government shutdown.
We’ll see if lawmakers can make a deal to delay the partial government shutdown.

The proposal does not provide much long-term certainty but instead punts the issue down the road.  Therefore, this may not be the end of mortgage rates at these levels.  On a more humorous note if you are feeling compelled to encourage lawmakers to strike a deal you may want to follow the advice of this website:

In case you missed it President Obama officially nominated Janet Yellen to be the next chairman of the Federal Reserve.  As I’ve pointed out previously on ‘rate update’ Yellen is viewed as a “dove” amongst her peers and therefore is more likely to leave accommodative monetary policy in place for a longer period.  This is a favorable sign for mortgage rates in the near term.

In the near-term it looks as though mortgage rates may reverse higher.  However, I am encouraged by some compelling reasons that mortgage rates may actually move lower over as we head into the end of the year.  I will report on those in future updates.

Current Outlook: near-term locking bias