After the U.K’s vote to leave the European Union, mortgage rates continue to plummet, closing the gap even more to all-time lows.
“Mortgage rates have now dropped 15 basis points over the past two weeks, leaving them only 10 basis points above the all-time low,” Freddie Mac Chief Economist Sean Becketti said.
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(Source: Freddie Mac)
The 30-year fixed-rate mortgage averaged 3.41% for the week ending in July 7, 2016. This is a decrease from last week’s 3.48%, and from last year’s 4.04%.
The 15-year FRM averaged 2.74% this week, a decrease from last week’s 2.68% and last year’s 3.2%.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.68% this week, a decrease from last week’s 2.7%. Last year, the 5-year ARM averaged 2.93%.
“Continuing fallout from the Brexit vote drove Treasury yields lower again this week,” Becketti said. “The 30-year fixed-rate mortgage followed Treasury yields, falling 7 basis points to 3.41 percent in this week’s survey.”
The Federal Reserve’s minutes from the June meeting showed officials held off on raising mortgage rates in June until they knew the U.K’s decision, as many believe Brexit could cause financial instability in the U.S.
Now that the U.K. voted to leave, the general consensus among those experts is that mortgage interest rates are going down, but just how low?
Well, according to analysts at Fitch Ratings, mortgage rates could hit all-time lows as the Brexit dust settles, as global investors move money from European sovereign wealth bonds into the safe-haven of 10-year US Treasurys. This creates a damping effect on yields, with demand rising for Treasurys, pushing down mortgages rates in return, which are widely viewed as linked to the performance of US 10-year bonds.