Could the Government Shutdown Lower Your Mortgage Rate? Experts Sound Off
When Washington grinds to a halt, Americans start pinching pennies and scanning for answers: Will the government shutdown make my mortgage cheaper? Top industry voices weigh in as the current crisis threatens to become the longest in US history and its ripple effects are being felt from Wall Street to Main Street.
Lock In Today's Shutdown-Driven Rates
Market uncertainty has pushed rates down slightly. Compare offers from 50+ lenders and lock in before the shutdown ends and rates bounce back.
Compare Rates Now →Bond Market on Edge: The Real Mortgage Rate Story
Forget political drama mortgage rates move with the 10-year Treasury yield, which trades about two points below average mortgage rates. With the shutdown dragging on, Treasurys have dipped just above 4%, and homebuyers wonder if relief is coming.
📊 How Treasury Yields Drive Mortgage Rates
The relationship is simple but powerful: when 10-year Treasury yields fall, mortgage rates typically follow within days or weeks. During shutdowns, this connection becomes even more critical as investors flee to the safety of government bonds.
- Normal spread: Mortgage rates run 2.0-2.6 points above Treasury yields
- Current 10-year Treasury: 4.05% (down from 4.25% pre-shutdown)
- Current mortgage rates: 6.27% average (down from 6.50%)
- Potential impact: 0.125-0.25% rate drop if shutdown continues
💬 Expert Opinion: Chris Whalen
"Shutdowns create friction," says Chris Whalen, mortgage finance veteran, noting that the recent mortgage rate slips stem from aggressive lenders, rather than market fundamentals.
While FHA delays cause headaches for some, shock waves haven't swept the overall market mortgage rates might see only subtle shifts. The real story is lender competition, not government dysfunction.
Historical Shutdown Impact on Rates
| Shutdown Period | Duration | Rate Change | Impact |
|---|---|---|---|
| 2018-2019 | 35 days | -0.20% | Moderate drop |
| 2013 | 16 days | -0.15% | Small drop |
| 2025 (Current) | Ongoing | -0.09% | Minimal so far |
*Rate changes measured from shutdown start to peak impact.
🔗 Related Analysis
- 5-year mortgage rate forecast — Long-term outlook beyond shutdowns
- Fed rate cut impact — How monetary policy affects rates
Investors Flock to Safety in Uncertain Times
Dr. Selma Hepp, Cotality's chief economist, explains: Government shutdowns spook investors into buying Treasurys. This pushes their yields down, which can shave 0.125 to 0.25 percentage points off mortgage rates.
💰 Translation: What This Means for Your Payment
A 30-year fixed rate might drop from 6.375% to near 6.125%, if uncertainty lingers. Here's the real-world impact:
Monthly Payment Comparison
⚠️ But Don't Expect a Sharp Drop
Shutdowns also muddy the water by freezing the flow of critical economic data like jobs and inflation figures the Fed watches to set bigger policy. Everything depends on how long Washington stays offline and how the markets react.
- Delayed data: Jobs reports, CPI, GDP figures all frozen
- Fed uncertainty: Can't make informed policy decisions
- Market volatility: Traders guess at economic health
- Lender caution: Some pull back on aggressive pricing
Capitalize on Shutdown Uncertainty
Rates are down 0.09% since the shutdown began. Lock in now before Washington reopens and rates rebound.
Lock In Today's Rate →Gradual Declines, Not Fireworks
According to Zillow, rates have dipped just nine basis points (0.09%) since the latest shutdown hardly enough for buyers to storm the market, but if the situation drags, small declines could build up.
📉 Rate Trajectory During Shutdown
Yet experts warn: once the government boots back up, mortgage rates could continue gliding down. For would-be buyers, it's a wait-and-watch game.
🎯 Post-Shutdown Scenarios
✅ Best Case: Quick Resolution (1-2 weeks)
Rates drop 0.10-0.15%, then stabilize as data flow resumes. Good time to lock if you're ready.
⚠️ Moderate Case: Extended Shutdown (3-4 weeks)
Rates drop 0.20-0.25% as uncertainty peaks. Strategic locking window opens.
❌ Worst Case: Prolonged Crisis (5+ weeks)
Rates could drop 0.30%+ but economic damage mounts. Risky environment.
Lock In or Wait? Tips for Homebuyers
Locking in a mortgage rate on a dip is tricky rates can change by the hour, making timing stressful for buyers. For those further from closing, following trends in the 10-year Treasury yield is the surest clue: lower yields usually mean lower mortgage rates.
🎯 Strategic Timing Guide
- Lock now if: You're closing within 30-45 days and rates dropped 0.15%+
- Wait if: Shutdown just started and you're 60+ days from closing
- Monitor daily: 10-year Treasury yields (below 4% is favorable)
- Have backup plan: Rate lock extensions cost money, plan accordingly
But don't chase tiny changes a few basis points in your interest rate won't mean dramatic swings in overall payments. Instead, stay informed, compare lenders, and use every negotiating tool available.
Compare Lenders During Shutdown
Different lenders react differently to market changes. Get quotes from 3-5 lenders to find the best shutdown-driven deal.
Compare Lenders Now →Final Word: Uncertainty Ahead
A government shutdown adds risk to a housing market already slowed by stiff home prices and high rates. The message from experts? Don't expect miracles, but keep your eyes on the bond market and your finger on the pulse of the economy.
🎯 Key Takeaways
- Modest impact: Expect 0.10-0.25% rate drops, not dramatic changes
- Timing matters: Longer shutdowns = bigger rate drops
- Watch Treasurys: 10-year yield is your best predictor
- Post-shutdown bounce: Rates may rise when government reopens
- Lender competition: Shop around for best shutdown deals
Lower mortgage rates may slowly arrive, but political turbulence means today's deals could vanish tomorrow. Act strategically, not emotionally.
🔗 More Resources
- Complete rate timing guide — When to lock vs wait
- 10 biggest mistakes — Avoid costly errors
Don't Miss the Shutdown Window
Rates are down now but could rebound quickly. Get pre-approved today and lock in your best deal before Washington reopens.
Get Pre-Approved Now →Frequently Asked Questions
Do mortgage rates go down during government shutdowns?
Yes, but modestly. Historical data shows rates drop 0.10-0.25% during shutdowns as investors flee to Treasury bonds. The current shutdown has caused a 0.09% drop so far. Longer shutdowns typically result in larger rate decreases.
Should I wait for the shutdown to end before locking my rate?
It depends on your timeline. If you're closing within 30-45 days and rates have dropped 0.15%+, lock now. If you're 60+ days out, you might wait to see if rates drop further. However, rates often bounce back quickly when shutdowns end.
How does the shutdown affect FHA and VA loans?
FHA and VA loan processing can be delayed during shutdowns as government employees are furloughed. However, rates for these loans follow the same Treasury-driven patterns as conventional mortgages. Expect slower processing but similar rate movements.
What happens to mortgage rates when the government reopens?
Rates typically stabilize or rise slightly as uncertainty fades and investors move out of safe-haven Treasurys. The 2018-2019 shutdown saw rates rise 0.10% within two weeks of reopening. Lock before the shutdown ends if you want to capture the dip.
How long does a shutdown need to last to significantly impact rates?
Significant rate drops (0.20%+) typically require shutdowns lasting 3-4 weeks or longer. Short shutdowns (1-2 weeks) produce minimal impact (0.10-0.15%). The longest shutdown (2018-2019, 35 days) caused a 0.20% rate drop.
Can I still get a mortgage during a government shutdown?
Yes! Conventional loans continue processing normally. FHA, VA, and USDA loans may experience delays in government verification steps, but most lenders can still originate loans. Expect longer processing times for government-backed loans.