June 24th, the world learned the result of the EU Referendum, a shocking 52% voted for the UK to leave the European Union. Since then, markets across the world are feeling the consequences. Less than a week later, mortgage rates have fallen to the lowest levels since May of 2013. One of the largest, most immediate effects to the average American, is how the vote will change mortgage interest rates.
So What Does This All Mean?
These historically low rates have a couple of implications. As Greg McBride, chief financial analyst at Bankrate says “If you’re a borrower, don’t wait to lock your rate as this opportunity may not last long.” It also means that now is a good time to consider purchasing a new home and an even better time to refinance your current home at a lower interest rate. With rents rising and gas prices and mortgage rates low there is no time like the present to take advantage of opportunities in the housing market.
The low mortgage rates this past quarter have been good for the housing market despite an overall average economy. Mortgage applications rose 17% from the end of March through the beginning of June according to a Compass Point report. Everything could be up in the air again, however, if somehow a Brexit referendum manages to pass. With instability comes new opportunity.
The Future for Mortgage Rates
The Federal Reserve voted in June to leave interest rates unchanged and will meet again in late July. Federal Reserve Board Chair Janet Yellen mentioned at the time of the vote that although they still plan to raise the rates in 2016, they will proceed with caution. This is in part to do a slowdown in domestic job growth and of course the uncertainty in the market. Many, including Yellen, have said they still feel “optimistic” the economy will turn around while Americans are able to take advantage of the market responding to Brexit.
The bottom line is that current and potential home borrowers should take advantage of lower interest rates, acknowledging that rates may rise in the foreseeable future. If you have questions about current mortgage rates or even general home buying questions be sure to contact your V.I.P. mortgage officer.
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This information is provided by a third party for educational purposes only and does not reflect the opinions of V.I.P. Mortgage, Inc. Information is deemed reliable but not guaranteed. Any material is not intended as a pre-qualification, commitment to lend, a reason to enter into a purchase contract, hire a real estate professional, or take any action whatsoever. Always consult your financial planner before making any financial decisions.