Share
- Today’s report on mortgage applications from the Mortgage Bankers Association indicates that the government shutdown has had an impact on the housing market. The purchase component fell 4.8% this week relative to last, the third consecutive decline. The three-week decline in applications came at the same time that average mortgage rates fell nearly 0.25 percentage points.
- Due to the government shutdown, lenders have been unable to get the form 4506-T from the IRS. Lenders use this document to verify a borrower’s income. However, lenders can also use W-2s and tax records to verify this information though it is more time consuming, costly, and requires more scrutiny. As a result, the shutdown of the IRS has been more of an inconvenience. However, the shutdown has furloughed the majority of FHA employees so transactions requiring special treatment like condos are not being completed. The complete closure of the USDA’s rural housing program is also having an impact as this program serves nearly 125,000 borrowers a year. As a result, applications through government programs fell 7.4% this week as compared to 3.9% in the conventional space, a reflection of the direct impact of the furloughs.
- Mortgage rates have crept up in recent days in response to market jitters that the US might hit the debt ceiling, but they remain relatively low. However, applications have fallen due to the direct impact of the budget impasse and government furloughs. While the immediate impact has been relatively modest, the impact will grow if consumer confidence erodes. Still, inventories remain tight, underwriting is sound, construction is tepid, and affordability is strong, so the near term impacts would be muted relative to the last recession.
Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.