Mortgage rates are likely to fall in October. Financial markets seem very sure that the Federal Reserve will reduce the federal funds rate at the end of its scheduled Oct. 28-29 meeting. Mortgage rates are likely to slip lower as investors gain confidence that the Fed will reduce short-term rates once or twice before the end of the year.
However, the government shutdown could affect the Fed’s decision and mortgage interest rates. Without the government functioning, the Labor Department’s employment report and the consumer price index (CPI) that measures inflation won’t be released. The Fed looks at those reports very closely to help them make decisions.
Both the Mortgage Bankers Association and Fannie Mae both expect a small decrease in mortgage rates in the final three months of the year. Fannie Mae expects the average to drop about .25% in the fourth quarter, while the MBA expects rates to drop about 1/8%.
