Mortgage rates fall, but shutdown may mean you can’t get a loan

Mortgage rates have tumbled for the third straight week, with Freddie Mac pegging the 30-year fixed loan at an average of 4.22%, down from 4.32% last week to the lowest level since June.

But what good is a low rate if a lender can’t process your application?

A protracted government shutdown would hamper the ability of lenders to confirm borrowers’ incomes and identities, as well as threatening loans that are backed by agencies such as the Federal Housing Administration.

“The federal government shutdown will have a growing impact on the housing market the longer it continues,” David H. Stevens, president and chief executive of the Mortgage Bankers Assn., said in a statement Thursday.

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“Lenders processing loans that need tax transcripts, Social Security number verification, or FHA home loans face longer delays and reduced functionality,” Stevens said, warning of “confusion and fear among borrowers about whether they will be able to close on a home purchase or refinance.”

Sales of rental properties awaiting FHA financing could be held up as well, Stevens said.

Experts said mortgage seekers should discuss timelines and expectations with their lender, and inquire about longer commitments, longer rate locks and extension policies for each.

“If the government shutdown is only for a few days, it should be minimally disruptive,” said Keith Gumbinger, vice president of HSH.com, which tracks mortgage rates.

“Most loans are closed toward the end of the month, so a few days’ delay in getting documentation shouldn’t derail too many deals,” Gumbinger said.

“However, if it persists for several weeks, disruptions and backlogs are likely to multiply.”

US 30 Year Mortgage Rate data by YCharts

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