Government Shutdown Impacts Housing Market
The government shutdown has ended, and the housing market is starting to recover. However, homebuyers and homeowners should be prepared for some delays, particularly those seeking certain government-backed mortgages. It’s unlikely that services will return to normal right away, so a bit of patience might be necessary.
If you’re applying for government-supported loans, it’s worth mentioning that, while these programs didn’t completely stop during the shutdown, federal agencies have been operating at a reduced capacity. This has resulted in slower processing for applications.
The Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and USDA loans have all been experiencing delays. These delays could impact many potential buyers.
The shutdown began on October 1, leaving major housing programs operating with limited resources. This situation has been frustrating for buyers waiting to secure loans, and sellers have also been caught in the waiting game.
Shannon McGahn, chief advocacy officer for the National Association of Realtors, noted that delays in processing FHA, VA, and USDA loans, as well as new flood insurance policies, have had a tangible negative impact on local economies. Each day of the shutdown brought more economic challenges.
“There’s a significant backlog, so we expect processing times to remain extended for some time,” she added.
If you find yourself in the middle of an application or are just about to begin the process, keep in mind that it may take longer than normal.
Brian Sherwan, Vice President at William Laveis Mortgage, remarked that those applying for FHA and VA loans should get ready for a lengthy journey. The holiday season may complicate things further, adding to the processing time.
He also mentioned that many buyers are proactively seeking pre-approval letters and staying informed about the market dynamics, which is probably a good move in the current climate.
“I suspect it’s not just the end of the shutdown that’s affecting the market; other factors like the recent discussions around 50-year mortgages and Fed decisions also play a role,” he said.
Mortgage Market Movements
There are some key details for anyone looking to secure a bank loan or refinance. Mortgage interest rates are always fluctuating, and this was evident during the shutdown.
As of the week ending November 13, the interest rate for a 30-year fixed mortgage was reported at 6.24%, which has increased slightly from the previous week. Still, it’s lower compared to the same period last year when rates hit 6.78%.
Bob Driscoll, from Rockland Trust, explained that the mortgage market can shift quickly. He suggested that borrowers looking to refinance should do so not based on timing, which is unpredictable, but rather on their own financial readiness. If the numbers work for you now, proceed, as future refinancing options may always be available.
With the holiday season approaching, this factor will also be relevant in the approval process. Sherwan stated it’s still possible for homebuyers to close deals by year-end, but bank response times may lag.
“It’s advisable for loan officers to prepare all the necessary documentation as soon as a contract is finalized,” Sherwan added. Different banks will have different holiday hours, so checking in with your loan officer about closing potentials is critical.
“While the underwriting process can be quick, be prepared for appraisals and other reports which may take longer,” Sherwan warned. It’s essential to have realistic expectations about timelines during this busy period.
