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 Tumbling
If 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.
Fixed Conforming Mortgage Rates Today
30 year mortgage rates are averaging 4.27 percent today and probably will stay around current levels until the debt ceiling limit is reached or a deal is made between Democrats and Republicans. If no deal is made and the ceiling is breached, average 30 year mortgage rates will fall back under 4.00 percent.
If you're looking for a loan, you don't have to wait for average rates to move back under 4.00 percent because there are many lenders already offering rates below 4.00 percent. The lowest 30 year mortgage refinance rates right now in our rate database are at 3.625 percent with 2 mortgage points. The lowest 30 year rates without points are available at 3.875 percent, still under 4.00 percent!
Current mortgage rates on 15 year conventional loans are averaging 3.33 percent this week, a decline from the previous week's average 15 year mortgage rate of 3.35 percent. A default on the nations debt would send 10 year bond rates down towards 2.00 percent which would send 15 year mortgage rates back under 3.00 percent.
As with 30 year rates, we also have lenders currently offering 15 year rates under 3.00 percent. 15 year refinance rates today in our database are available at 2.75 percent with 1.875 mortgage points. We also have many lenders quoting 15 year refinancing rates at 2.75 percent with 2 points. The lowest 15 year refi rates without points are exactly at 3.00 percent.
Today's Jumbo Mortgage Rates
Today's mortgage rates on 30 year jumbo loans are averaging 4.57 percent, a decline from last week's average 30 year jumbo mortgage rate of 4.65 percent. A debt default would send 30 year jumbo rates back under 4.50 percent and probably down to the 4.25 percent range.
Right now the lowest 30 year jumbo mortgage interest rates in our database are still under 4.00 percent. We have one lender, Capital One, quoting 30 year jumbo refinance rates at 3.75 percent with 2 mortgage points. The lowest 30 year jumbo rates without points at 4.125 percent is also from the same lender.
Average 15 year jumbo rates are currently at 3.88 percent, down from last week's average 15 year jumbo rate of 3.93 percent. A debt default would send 15 year jumbo rates down to the 3.50 percent range. Currently, the lowest 15 year jumbo refi rates in our database being offered are at 3.125 percent with 2 points and at 3.50 percent with no points.
