What does Brexit have to do with you? The turbulent atmosphere enveloping the United Kingdom may actually create a windfall in the United States. According to Jim Costello, Senior Vice President of Real Capital Analytics, funds that had been active in the United Kingdom markets may, now, be shifting some of that investment into the United States market.
Freddie Mac concurs, reporting that the uncertainty investors are experiencing post the Brexit outcome has driven U.S. Treasury yields to record lows which, in turn, sent mortgage rates near record lows as well. The 30-year fixed rate mortgage began the week at an averaged 3.41% down almost 3.5% from the previous week and over 4% lower than the average a year ago.
With mortgage rates taking a downward turn, refinancing may be poised to explode. According to the latest report from the Urban Institute, millions of homeowners have recently gained significant home equity due to rising home prices, and are now eligible to refinance and use some of that equity. Brexit could, inadvertently, be triggering a refinance boom to rival the one from 2008 – 2014 when an estimated 25 million borrowers refinanced. London may be roughly 5000 miles away but Brexit is definitely effecting mortgages from California to Maine and beyond.
Even with customary election year jitters, unemployment continues to decline as consumer confidence seems to be remaining stable. Britain isn’t the only economy providing us benefit, the dollar jumped more than 2% against the Japanese yen with continued gains against the euro, pound, commodity currencies and a cross-section of emerging market currencies. With legitimate concerns regarding sluggish growth in China and embattled Italian banks; Colin Cieszynski, Chief Market Strategist at CMC, contends bond yields are being driven down by investor uncertainty surrounding Brexit, China, Italy and the EU rather than any domestic issues. With bond yields lower, so are interests rates.
We all know that mortgage rates change daily, and while June job growth was high, that news didn’t have much effect on mortgage rates. Now might be your time, if you’re in the market to purchase or refinance, locking in a rate could be paramount right now. With the UK Prime Minister field narrowed to just Theresa May, and actual removal from the EU moving closer, lower mortgage rates may or may not last very long. Given that information, if you have that new home in your sites or are considering refinancing, this may be the week to pull that trigger.
This Week’s Mortgage Rate Summary:
Understanding Rate Movement:
When you are shopping for a mortgage rate, it is important to understand that mortgage rates change hourly in some cases. When rates change, lenders may not be able to honor rates previously quoted that have not been “locked”. Speak with your lender before rates begin to move. The early week rally in stocks already began to hurt mortgage-backed securities.
Rates Trending: Above Neutrality leaning to Volatility
With record trades, continued European uncertainty and less than stellar improvements in the Chinese economy, coupled with impending issues to be sorted with Italian banks, the U.S. market appears to be one of few bright spots. However; Theresa May’s election as U.K. Prime Minister and impending action on article 50, as well as the Fed’s Beige Book debut, the Canadian Interest rate and policy announcement, and the CPI and Retail Sales reports followed by the Home Builder’s Index and Lending Indicator reportings certainly promise action.
Contemplation may not be your friend. If you are seeking to purchase or refinance, contact your lender now, rates are poised to move at any moment.