It is now 10 days since the government shutdown began and the mortgage rates appear to be moving lower.
They were already near three-year-olds low, who were on their way into the shutdown, and now with that pulling on, the bond yield is also falling.
The 10-year bond yield, which acts as a bell at 30-year-old fixed priority rates, was down almost 10 basic points (BPS) this morning.
It is approaching the important threshold of 4%, which, if broken, could lead to another leg down to mortgage rates.
But the more ominous pickup here is that the economy doesn’t look so good anymore.
Bond yields fall when GoV Shutdown hits day 10
As noted, the 10-year bond yield was nearly 10 BPS this morning despite the release of government data.
We missed what is arguably the most important data point last Friday, the monthly job report from the Bureau of Labor Statistics.
And a number of other reports, but BLS is reportedly “bringing back some furlouged workers to get the CPI report for released September.
Although it is likely to be delayed (as the release date is October 15), hope is apparently to get it out before the Fed’s next meeting on October 28.
Of course, the odds of another 25 BP cutting in the federal fondery rate are still at almost 95%per year. CME FedWatch.
So it is doubtful that any piece of data released between now and then will make much of a difference.
There is just a general atmosphere that the economy has turned, even though the stock market rips higher without care in the world.
But given that shares are trading near all heights, a withdrawal may soon be in store and it can lead to a rally in bonds.
Investors typically flee flee in the stock market when times become difficult and piles into safe port bonds, which increases the price of bonds, but lowers with attached dividends.
When that happens, interest rates on priority loans have a tendency to move lower.
So there is a decent dissertation here that the mortgage rates could move significantly lower in the fourth quarter of the year.
As a reference, in December 2024, I predicted a 30-year-old stuck in the tall 5s at the end of the year and we are not far away at the moment.
I have also explained that mortgage rates tend to move lower during shutdowns of the government, so between this fact and the very weak working data from late there is a large downward pressure on the mortgage rates.
The mortgage rates slide during the year before) (again)
Meanwhile, mortgage rates are already beating their annual levels under the recent weekly study by Freddie Mac.
The mortgage financier said the 30-year-old regular hit 6.30% this week, down from 6.34% a week ago and 6.32% this time last year.
The lowest reading for the 30-year-old fasting in 2024 was 6.08% last September, but it was very short as a wrong Hot JobR report and subsequent elections caused the rates to shoot higher.
However, it does not appear that there is much status in the way of lower mortgage rates this year, with financial data settled poor and much of Trump’s policy baked in.
It does not mean that we will not see withdrawals or surprises, but it feels like the “trend is our friend” right now for mortgage rates.
This means that there is a decent chance that they could move lower and beat all readings for 2024 at some point this year.
And dare I say dip below 6%, which would be the lowest reading since much early February 2023.
Meanwhile, although mortgage rates are kind of fixed due to a blackout of data, they are in a pretty good place.
Given that they flirt with 7% on several occasions this year, it seems to enter a government closure of about 6.25% pretty lucky.
Read on: How to easily track priority rates.
Before creating this site, I worked as a banking director of a wholesale loan in Los Angeles. My practical experience in the early 2000s inspired me to start writing about mortgage loans 19 years ago to help potential (and existing) home buyers better navigate the home loan process. Follow me on x for hot take.