The Effect of Brexit on Mortgage Rates in the United States
On June 24, 2016, England voted to leave the European Union. This historic decision, referred to as “Brexit”, has caused a ripple effect here in the United States. It has driven interest rates down to their lowest mark in three years. Mortgage interest rates will fluctuate most directly due to the cost of mortgage backed securities. When mortgage bond prices go up, interest rate tend to fall and when mortgage bond prices drop, mortgage rates will rise. In addition to this correlation, the overall US economy will also influence mortgage rates.
Generally speaking, when the economic indicators such as the stock market, inflation, and unemployment are positive, mortgage interest rates will rise. When the economic indicators suggest our economy is not prospering, rates will drop.
In December of last year, the Federal Reserve projected that it would raise interest rates up to four times in 2016. On June 15, 2016, Federal Reserve Chairperson, Janet Yellen decided NOT to raise rates. This was due to a very weak employment report in May.
Brexit has caused severe volatility in the global stock markets and has had a negative impact on the stock market here in the United States. No one knows what the long term impact of Brexit will be, but it is safe to say that the immediate impact of England’s decision to leave the European Union has directly led to lower interest rates.
If you are considering buying a home, or if you currently have a mortgage and are considering a refinance, right now is a perfect time to get a mortgage loan evaluation from a licensed mortgage professional.
Not sure where to start? Click here to contact Senior Loan Officer Keith Harris or to get pre-qualified.
Keith Harris at Intercoastal Mortgage Company
NMLS ID # 838973
Company NMLS ID # 56323
Intercoastal Mortgage Company is an Equal Housing Lender.