Mortgage interest rates are subject to fluctuations due to various market factors. Let's explore some of the specific reasons behind these changes.

1) Supply and Demand

One major factor is the principle of supply and demand. When there is high demand for homes, mortgage interest rates tend to rise. Conversely, when the housing market slows down, lenders may lower rates to encourage demand.

2) Economic Shifts

Economic shifts can also impact interest rates. When the economy is thriving, interest rates typically rise. Conversely, when the economy experiences a slowdown, interest rates often drop in order to stimulate spending.

3) The federal funds rate

The federal funds rate is another factor affecting mortgage rates. This rate reflects the interest rate at which lenders can borrow money, and it is managed by the Federal Reserve in response to economic indicators such as inflation rates and employment figures.

4) Changes to the prices of mortgage backed securities

Changes to the price of mortgage-backed securities can also impact mortgage interest rates. Lenders often bundle mortgages together and sell them to investors as securities, and fluctuations in the value of these securities can affect the interest rate on your mortgage.

5) Treasury Bills

Competition for investor funds: Treasury bills are often seen as a safe investment option, so when Treasury bill rates rise, it can attract investor funds away from other investments such as mortgage-backed securities. This can lead to an increase in mortgage rates as lenders may need to offer higher rates to attract investors.

6) Your credit score

Your credit score plays a key role in determining your mortgage interest rate. Improving your credit score and addressing any errors on your credit report can position you to secure a better interest rate. In some cases, you may also be able to buy down your interest rate. If you need guidance on how to improve your credit score, your lender can provide advice on which steps will be most effective.

7) The National Debt Ceiling:

If the debt ceiling is not raised, it could lead to a default on U.S. government debt, which could have significant and far-reaching consequences for the economy and financial markets. In this scenario, mortgage rates could potentially increase due to increased uncertainty and risk in the market.

A default on U.S. government debt could cause investors to become nervous and sell off their holdings, including mortgage-backed securities. This could lead to a decrease in demand for these securities, which could drive up the cost of borrowing for lenders. As a result, mortgage rates could rise in order to compensate for the increased cost of funding.

Additionally, if a default leads to a downgrade in the U.S. credit rating, it could lead to higher borrowing costs for the government, which could have a ripple effect throughout the economy. This could result in higher interest rates across the board, including mortgage rates.

It's important to note that the impact on mortgage rates would depend on the severity and duration of a potential default, as well as how the market responds to the situation. However, in general, a default on U.S. government debt could potentially lead to higher mortgage rates due to increased risk and uncertainty in the market.

Although the debt ceiling is in the hand's of politicians, this looming risk might make it prudent to lock your loan sooner than later.  Since the government has said the debt ceiling could become an issue by June 1st, 2023, this is something worth keeping an eye on.