Lower Mortgage Rates Today: 30 Year Conventional Rates Averaging 4.27 Percent
Mortgage rates have drifted lower for the past several weeks. Average 30 year mortgage rates today are at 4.27 percent, a decline from last week's average 30 year rate of 4.29 percent. Mortgage rates have followed 10 year bond yields lower which are averaging 2.62 percent today.
It will be interesting to see where rates are in the next couple of weeks. The government shutdown hasn't had an effect on bond rates, which in turn hasn't affected mortgage rates but the coming debt ceiling limit is another matter. The official date the U.S. Treasury says we will hit the debt limit is October 17 but it may happen sooner. Debt Ceiling Breach Would Send Mortgage Rates TumblingIf an agreement is made between Republicans and Democrats to increase the borrowing limit of the U.S. Government, bond rates and mortgage rates will remain around current levels. If the debt ceiling isn't increased and the U.S. defaults, believe it or not bond rates will tumble in the short term which would send mortgage rates sharply lower. Any other country other than the United States defaulting on its debt would send bond rates for that country through the roof. In the short term, bond rates would plummet on U.S. Treasuries because there would be a classic flight to quality. Equity markets would plummet and most commodity prices (except gold) would plummet, sending investors into the safety of U.S. bonds. Rates on bonds work in inverse to bond prices, so when prices move higher, rates move lower and vice versa. Investors would flee equity markets, commodity markets, and debt from most other countries. All this money would have to go somewhere and most of it would end up buying U.S. bonds. In the long run if the United States didn't pay its bills, then yes, U.S. bond rates would soar but everyone knows this scenario won't play out. Even if the debt ceiling is breached, politicians would finally get their act together and pass an increase so the default would be a short-term crisis.
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