Key Takeaways
- Government shutdowns have been known to dampen yields on 10-year Treasuries and potentially demand for mortgages, which could lower rates.
- However, the opposite could also happen, with a lot depending on how long the shutdown and economic data blackout lasts as well as on a host of unpredictable variables.
- Predicting mortgage rates is extremely hard. Buy when you’re financially ready and find a house that’s a good fit. You can always refinance later.
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The U.S. government shutdown could impact the cost of mortgages, especially if the Republicans’ and Democrats’ inability to agree on a new spending bill drags on. These standoffs make it harder to tell how the economy is doing, and consequently complicate the tricky task of predicting rates even more.
How the Shutdown Could Shake Up Mortgage Rates
Mortgage rates are most heavily influenced by yields on 10-year Treasury notes. Lenders, who often bundle mortgages together and sell them to investors, price their mortgage-backed securities (MBS) based on the returns offered by competing government bonds. That generally means cheaper mortgages during shutdowns, as in these moments of uncertainty, 10-year treasury notes are in high demand. Their prices rise and their yields fall.
Shutdowns can also pull rates lower by weighing on demand for mortgages. That’s because they result in hundreds of thousands of federal employees not getting paid and delayed issuing of government-funded mortgages, such as FHA, USDA, and VA loans, as well as federally financed flood insurance, which is mandatory in some areas.
This doesn’t, however, mean it’s a given that mortgage rates will slide during a government shutdown.
There are competing forces at play. For example, rates could be pushed higher by credit and fiscal worries and uncertainty about the direction of the economy. If government agencies aren’t operational, they can’t release their scheduled reports about such topics as the labor market and inflation, which often have a major bearing on the economy, borrowing costs, and investor behavior.
Without crucial data on which to base their decisions, policymakers, investors, and the general public will either sit still and wait for clarification or be forced to make their own predictions. “The longer the shutdown drags on, the greater its potential influence on markets and monetary policy decisions will be,” said Realtor.com senior economist Jiayi Xu.
Why This Matters for You
The government shutdown causes confusion about the direction of mortgage rates, and it reinforces the argument that the smartest move for homebuyers is to ignore the noise and buy when you’re ready. You can refinance if rates fall, but you can’t go back and buy a home that’s already been sold.
Lock a Rate Now or Wait? What Homebuyers Should Know
If you are in the market to buy a home, you’re likely wondering if it’s cheaper to get a mortgage now or wait a bit longer. Unfortunately, there’s no way of knowing.
Economists and mortgage strategists constantly offer forecasts on where rates are heading. In most cases, those projections should be viewed with caution—not because the experts lack insight, but because interest rates are inherently difficult to predict.
Realtor.com economists expect that mortgage rates won’t move much during the government shutdown and will then ease once the disruption is resolved and economic data is published again. However, a lot depends on how long the shutdown lasts, as well as on a host of unpredictable variables.
The current belief is that inflation will fall and the Fed will cut interest rates again. However, all it could take is a surprise reacceleration in inflation, stronger-than-expected job growth, or another upset to change the narrative again.
In other words, timing mortgage rates is next to impossible—and more so now that key guiding data are not being published. The smart move is to buy when you’re financially ready and find a house that’s a good fit. Remember, whatever mortgage rate you get doesn’t have to be yours forever. If rates later drop, you can refinance.
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The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2025. Use is subject to the Zillow Terms of Use.
