U.S. Mortgage Rates Rise as Congress Vote Ends Shutdown

U.S. mortgage rates climbed for a second week, increasing borrowing costs as Congress voted to end the government shutdown.

The average rate for a 30-year fixed mortgage rose to 4.28 percent from 4.23 percent, Freddie Mac said in a statement today. The average 15-year rate increased to 3.33 percent from 3.31 percent, according to the McLean, Virginia-based company.

The end of the fiscal impasse may give a boost to the housing market. During the shutdown, waits lengthened for some borrowers seeking mortgages backed by the Federal Housing Administration and Department of Agriculture, and confidence among U.S. homebuilders fell to a four-month low.

“An agreement is great,” Paul Diggle, property economist at Capital Economics Ltd. in London, said in a telephone interview yesterday. “It’s good for consumer sentiment and the willingness of Americans to make major purchases.”

President Barack Obama just after midnight signed the bill to fund the government and lift the borrowing limit, according to a White House statement. The measure puts federal workers back on the job starting today and permits the U.S. to pay its debts, benefits and salaries.

An increase in mortgage rates since May has slowed the housing recovery. Builder confidence in October weakened in three of the four U.S. regions, with companies in the Northeast, which includes the Washington area, showing the greatest deterioration, according to the National Association of Home Builders/Wells Fargo index of homebuilder sentiment.

Loan applications for U.S. home purchases declined 4.8 percent last week to the lowest level this year, the Mortgage Bankers Association reported yesterday.

The average rate for a 30-year fixed loan jumped to a two-year high of 4.58 percent in August from a near-record low of 3.35 percent in early May.

To contact the reporter on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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