The surprise victory in Britain of the campaign to leave the European Union may be spurring panic across the Continent, but “Brexit” has left U.S. home buyers with a very definable windfall: mortgage rates that are now the lowest they’ve been in more than three years.
We’ve already seen an immediate impact of Brexit on the mortgage market as the event triggered major declines in rates. The average 30-year conforming rate is around 3.5 percent, the lowest in more than three years and very near the lowest average rates recorded in late 2012.
Lower rates produce lower monthly payments. And the decline in rates means that the well qualified can afford an 8-percent higher price than they could at the beginning of the year. That increase in buying power is more than offsetting the impact of higher prices.
But not all parts of the residential real estate market will strengthen as a result of Brexit. Demand could soften in specific markets and segments that will be most negatively impacted by the economic difficulties coming from the U.K. tailspin.
Eventually the combination of higher prices and higher mortgage rates will lead to softening demand across the U.S. However, that is not imminent and now has very little chance of occurring before late fall or winter, when we reach the slowest time of the year for home sales.
As for now, we have a nearly perfect scenario that sets us up for the best summer for residential real estate in a decade. Let’s talk about your mortgage options you may qualify to refinance your home or a second mortgage – call, text, or email me today!