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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Oct 17, 2013

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Home loan interest rates remained calm amid news that the government would re-open and avert a debt ceiling crisis.

Rate reports provided by loans.org show that all three interest rates changed minimally for the week ending Oct. 17, 2013. The 30-year fixed-rate mortgage averaged 4.13 percent, a miniscule increase from 4.11 percent seen last week.

The 15-year FRM did not change and remained at 3.15 percent.

The final interest rate reported, the 5/1 adjustable-rate mortgage, declined this week. It dropped from 2.89 percent to this week’s rate of 2.84 percent.

Despite a fear that the shutdown would have an all-encompassing impact on the mortgage industry, the housing market was not harmed greatly.

One fear for the market was a decline in mortgage loans due to a lack of financial information, such as Social Security verification. But a recent report by the Mortgage Bankers Association (MBA) found that mortgage applications grew for the second consecutive week.

The MBA attributed the growth to an increase in refinancing, but other experts believe that an openness from lenders helped keep the market stable.

Jonathan Hyer, senior managing consultant for American Financing Corporation, said many investors remained lenient and allowed loans to be processed without the normally-required documentation. For example, instead of a confirmation by the Social Security office, many investors accepted new mortgage loans as long as the borrower provided Social Security cards as proof.

Another expert looked past the shutdown’s impact and has instead found a rising trend.

Over the past year, home loan interest rate have increased about 1.5 percent. This change has altered the buyers in the housing market drastically, according to Daren Blomquist, vice president of RealtyTrac.

Research from RealtyTrac shows that as interest rates grew from 2012 to 2013, the rise in cash sales has also increased.

On a national scale, when interest rates were 3.60 percent in August of 2012, cash sales accounted for 30 percent of all home purchases. In August of 2013, when RealtyTrac noticed an average 30-year interest rate of 4.46 percent, cash sales comprised 45 percent of all purchases.

In a year’s time, the frequency of cash sales has increased from about one-in-three to about one-in-two. Investors that have sufficient funds to purchase a property with cash are pricing financed buyers out of the market, Blomquist said.

“There’s a plethora of cash buyers out there interested in buying real estate,” he said. “It has started to make it less affordable for those financed borrowers.”