Brexit and your housing decisions
Just in case you’ve been in a self-imposed media blackout for the last few months, on June 23 the people of the United Kingdom – representing the world’s fourth-largest economy – voted to leave the European Union. This was predicted to be a world-altering decision, and in some ways it already has been. Stocks worldwide lost $3 trillion in value in the immediate aftermath. The major U.S. markets suffered their largest two-day losses in 10 months.
But the world didn’t end, and economies haven’t collapsed. The U.S. markets recovered and are again posting all-time highs; recently the Dow Jones hit 18,347.67, breaking a record set in 2015. The big drops of January and February are in the rear-view mirror.
Of course, there is plenty of uncertainty over what’s going to happen next – including whether Britain may change its mind about leaving the EU. For the next year or two it will be very interesting to watch economies around the globe.
But let’s get to the real point for you: How will this all impact your housing decisions?
If you’re considering buying a home, or refinancing one, here’s the general answer: All the turmoil over there is good for us over here.
In anticipation of the Brexit vote and its market impacts, in June the Fed held off on raising interest rates. The Fed’s next meeting is in a couple weeks, and odds are they won’t change anything right away. They meet again in September – right before the election, which may also extend their cautious stance.
The real-world impact of all this for potential home-buyers is that mortgage rates, which had already reached “rock-bottom,” have dropped even a bit more recently, to as low as 3.3% for a 30-year fixed mortgage.
And many experts predict rates will stay down for a while. Here’s what Fannie Mae Chief Economist Doug Duncan has to say: “The Fed will very likely be on hold for some time as it observes the impact on U.S. and global financial markets and economic activity.”
So… it remains a very good time to get into a home mortgage or refinance an existing one. Interest rates are attractively low and are likely to remain there for a while – but rate raises have been predicted for a year now, and probably won’t be held off forever.
So you might want to take advantage of the Brexit situation – it might be much more comfortable observing the world’s economies from the home you’ve purchased or refinanced at historically low rates. Check in with an Pinnacle Capital mortgage advisor today to get some advice on the homeowner’s path that’s right for you.