Brexit and Low Mortgage Rates for the Summer
It's too early to say what the final result of the turmoil in Europe will produce, but in the short run the decision by Great Britain to leave the European Union or “Brexit” has been obvious: Mortgage rates have sharply fallen.
Mortgage rates move up and down constantly, but the jolt caused by the British election has produced a visible dip in the market. Depending on who you ask, quotes at or below 3.50 percent for 30-year, fixed-rate financing turned up a few days after the historic vote.
According to Freddie Mac, mortgage rates stood at 3.56 percent for prime, 30-year, fixed-rate mortgages for the week ending June 23rd – the day of the Brexit vote. This rate is decidedly low by historic standards and it's also substantially lower than a year earlier when the same loan was priced at 4.02 percent.
How do British elections impact US Mortgage Rates?
While it may be an election half a world away, the results sent shock waves through world financial markets. This vote raises questions on the future of many financial and trade systems and structures that have been in place since Britain joined the European Union in 1973.
With no immediate answer investors are nervous and, according to the Wall Street Journal, “Investors have flocked to the safety of U.S. Treasuries, pushing interest rates lower as riskier assets such as stocks tumbled.”
“Mortgage rates tend to move up and down with 10-year Treasury rates, though the relationship isn’t perfect,” according to the WSJ. And since just last week the 10 year Treasury rate has dropped 8% while 30 year fixed mortgage rates have dipped 6.7%.
Low for how long?
The short answer? No one really knows. With rates at near historic lows and home values increasing many people who may have been unable to refinance or were holding off may see real monthly savings by refinancing now.