At a Glance:

• Most mortgage borrowers are unaffected by the federal shutdown; conventional loans continue to be processed normally. 
• USDA is not issuing conditional commitments, which may delay certain loan approvals. 
• NFIP is unable to issue new flood insurance policies; private coverage may be required for flood zone purchases.
• Mortgage rates have declined modestly and are now at their lowest level since October 2024, with further movement possible following this week’s Federal Reserve meeting.

Nearly a month into the federal government shutdown, the majority of mortgage activity continues without disruption. Loans offered through traditional lenders are being processed as usual, and most borrowers are not experiencing delays. However, for those using specific federal programs—such as USDA loans or purchasing homes in flood zones—some procedural limitations remain in place.

This Mortgage Monitor update builds on our Oct. 1 edition, which outlined early expectations at the start of the shutdown.

No Effects on Conventional Home Mortgage Products

Despite the government shutdown, lenders continue to operate smoothly and efficiently, processing mortgages and refinance products without interruption. 

"Borrowers who seek a conventional mortgage or want to refinance through their bank generally can expect a smooth experience, free from delays or complications during the government shutdown," Odom said.

Potential Delays for USDA Borrowers

The U.S. Department of Agriculture is currently not issuing conditional commitments, which are required for final approval of USDA loans. While this doesn’t affect all borrowers, it may delay closings for those relying on USDA financing.

“We’re not seeing widespread delays, but USDA’s pause on conditional commitments means some loans are temporarily on hold,” said Robert Odom, President of the Mortgage Division at Ameris Bank. 

Borrowers considering or actively applying for a USDA mortgage loan should stay in close contact with their mortgage banker to understand how this may affect their timeline.

Flood Zone Buyers Face Limited NFIP Access

The National Flood Insurance Program (NFIP) provides essential flood insurance coverage to over 4.7 million property owners in flood-prone areas.¹ However, funding for the program is currently lapsed due to the government shutdown. As a result, the National Flood Insurance Program (NFIP) is unable to issue new flood insurance policies during the lapse. For purchases in flood zones, borrowers must obtain private flood insurance, which may be more expensive than NFIP coverage.

In some cases, insurers may assign an existing NFIP policy from seller to buyer, allowing coverage to remain in place without issuing a new policy. Private flood insurance is unaffected and remains available through non-NFIP providers.

“Closings in flood zones are still possible, but borrowers may need to explore private insurance options or work with their lender to determine next steps,” Odom said.

Mortgage Rates Reach 12-Month Lows 

Mortgage rates have declined steadily throughout October, reaching their lowest level in more than a year.² As of October 24, the average rate for a 30-year fixed-rate mortgage was 6.155%.³ 

This trend reflects broader market uncertainty, with investors shifting toward safer assets like U.S. Treasury securities. That movement tends to push yields down, which in turn influences mortgage rates.

“We’ve seen rates ease over the past few weeks, and while the change isn’t dramatic, it’s notable given how elevated rates have been for much of the year,” Odom said. “For borrowers who were waiting for a window of opportunity, this may be a good time to revisit their options.”

While mortgage rates are not set by the Federal Reserve—a point we’ve highlighted in previous Mortgage Monitor editions here and here—they are often influenced by the Fed’s decisions and the broader economic signals those decisions send. Analysts expect the Fed to announce another cut to its benchmark rate at the conclusion of this week’s FOMC meeting, which could contribute to further movement in mortgage pricing in the weeks ahead.⁴


Sources:
¹ https://www.fema.gov/flood-insurance/work-with-nfip/watermark-financial-statements
^{2, 3} https://www2.optimalblue.com/obmmi
⁴ https://www.reuters.com/business/fed-poised-cut-rates-this-week-with-more-easing-likely-tap-2025-10-27/

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.