A Shutdown Risks Crippling Still-Recovering Housing Markets …. 1. A Shutdown Risks Crippling Still-Recovering Housing Markets. One of the many negative effects of an extended shutdown of the federal government is its impact on the very fragile housing markets. 2. A government shutdown could create a backlog in non-FHA mortgage lending. The government’s key roles in mortgage lending would be put on hold, and a shutdown would also increase interest rates. 3. A government shutdown could cause mortgage rate increases. The last thing our economy needs is for mortgage lending to seize up, which would weaken housing demand and put downward pressure again on still-battered home values. Every family that owns a home, not just those seeking a mortgage in the coming weeks WILL feel the consequences. Click the pic to read the entire article.