U.S. mortgage rates rose for the first time in five weeks as a partial government shutdown delayed some borrowers from getting a loan.
The average rate for a 30-year fixed mortgage climbed to 4.23 percent from 4.22 percent, Freddie Mac said in a statement today. The average 15-year rate increased to 3.31 percent from 3.29 percent, according to the McLean, Virginia-based company.
The shutdown has lengthened the wait for some borrowers seeking mortgages backed by the Federal Housing Administration and Department of Agriculture. It also has postponed the release of economic-data reports, including the Department of Labor’s monthly employment figures, which Federal Reserve officials use to determine whether to continue stimulus efforts.
“We’re working blind in a very murky environment right now,” Keith Gumbinger, vice president of HSH.com, a mortgage-data firm in Riverdale, New Jersey, said in a telephone interview yesterday. “The longer this drag persists from the government shutdown, the less likely it is that the Fed is going to make a move at the end of the month.”
Federal Reserve Chairman Ben S. Bernanke said last month that more signs of lasting improvement in the economy are needed before the central bank cuts its $85 billion in monthly bond purchases. Minutes of the Federal Open Market Committee’s Sept. 17-18 meeting, released yesterday, show most policy makers indicated that budget cuts and an increase in borrowing costs were a drag on economic growth.
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.
Homeowners are taking advantage of the recent drop in rates to reduce their monthly loan payments. The Mortgage Bankers Association’s index of refinancing applications rose 2.5 percent last week, the fourth consecutive gain. A measure of purchases slipped 0.7 percent, the Washington-based group said yesterday.
While the federal shutdown is proving to be an “inconvenience” for the housing recovery, it may “become more problematic if the deadline for raising the debt ceiling passes without Congress reaching an agreement,” Paul Diggle, property economist at Capital Economics Ltd. in London, said in a research note yesterday.
If the U.S. doesn’t raise the debt limit by Oct. 17, the country’s borrowing authority would lapse. Treasury yields and mortgage rates would rise if the government were to run out of money, Diggle said.