By now you’ve likely heard that British voters have voted, in an historic referendum, to exit (or British exit = Brexit) the European Union. British Prime Minister David Cameron will resign later this year as a result, and the value of the British pound has fallen to some of the lowest levels since 1985. And, befitting a headline you’d expect to read on The Onion, The Washington Post reports this.
Regardless of whether or not Brexit is good or bad for the UK, EU, or the world, the United Kingdom is a long way away from the New River Valley – 3875 miles, roughly – so what impact will that have on the real estate market?
Everyone wishes for a crystal ball, but there is none. However, if I had one, this is what I’d say we should expect. In the short-term, it seems that we’ll see lower interest rates in the coming weeks, as markets worldwide seek an equilibrium. Not wanting to assume anything, I asked a few of our recommended lenders their thoughts, as well, on the whole Brexit thing, and what it would mean for home buyers (and owners) here in the New River Valley. They’re the best at reading the markets, and can usually give us a pretty good look into the short-term future of mortgage rates. Here’s what they had to say:
Kim Burke, LeaderOne Financial – “Markets reacted strongly to the news of “Brexit”, with money being dumped into bonds as uncertainty in Europe drives people towards safe harbor. Things quickly simmered this morning as the news settled in, but expectations are to see rates continue to push towards historical lows in the coming weeks. Of course, as we all know — our crystal ball can only tell us so much — we’ll see what other news unfolds as Brexit plays out and how markets are affected. My recommendation — hover your finger over the lock button — if you see 0.250% or more improvement to the rates you’ve been quoted this week — grab it.”
Robert Mitchell, Prime Lending – “Good news for home buyers, mortgage rates are very likely to stay low due to a bold move by the Brits voting to leave the European Union (EU). The overnight trades were volatile where the British pound dropped to a 30 year low. Reactions like today’s trade are quick, mainly driven by confidence, and will balance out over the next few months. The overall outcome of this is going to take time to determine. This will be the beginning of a large change in the global politics. The following weeks to come will be volatile for the global markets. This will take rate hikes off the table with the FOMC for now. The vote was close, 52% to 48%. The impact of this daring move can last for years causing a lack of confidence in traders. This translates to mortgage interest rates remaining low if not lowering more. This is good news for those in the market selling & buying! Rates staying low means buying is still attractive and realistic!”
Ryan Stenger, Freedom First Credit Union – “Just like everything in the media this is creating big stir. Make no mistake this IS big news simply because it creates uncertainty in the market place. With uncertainty comes volatility in markets. I would expect the mortgage bond market that drives mortgage interest rates to move up and down a bit with lenders making many price changes throughout the day. If a lender quotes on rate in the morning another higher or lower rate in the afternoon, they are not trying to pull one over one you. No one has crystal ball, but we should know more about general rate trends by middle of next week.”
According to https://gadcapital.com, we should be expecting a bit of a bumpy ride, but if everything goes as expected, home buyers and refinance loans should do well in the coming weeks. Feel free to connect here, or reach out to any of the recommended lenders above, for more insight!