Earlier this week, the mortgage industry saw the first true evidence of the impact of the Brexit as mortgage interest rates fell again, nearing all-time lows, and refinance applications jumped to an 18-month high, according to the latest mortgage application data from the Mortgage Bankers Association.
Further evidence of the apparent refinance boom came in Friday, when Zillow reported that in the wake of Britain’s decision to leave the European Union, refinance mortgage requests through its mortgage marketplace skyrocketed.
According to Zillow’s report, in the first week after the Brexit decision, which came down on June 24, refinance mortgage requests on Zillow rose 132% when compared to pre-vote activity in the previous week.
During that same week, purchase applications increased 24%, as some prospective borrowers took advantage of falling mortgage rates, which are nearing the all-time low, according to the latest data from Freddie Mac.
And even after the initial panic surrounding the Brexit began to subside, the refinance wave continued on Zillow.
According to Zillow’s report, during the week that ended on July 7, mortgage request activity stayed strong, as refinance requests were up by 107.6% and purchase requests by 13.3% compared to the week before the Brexit decision.
In fact, mortgage rates quoted to borrowers on Zillow continued to drop in the weeks since the Brexit, with the average 30-year fixed conforming mortgage rate falling 19 basis points since the Brexit vote, reaching 3.27% this week.
According to Zillow’s report, the current average rate for a 30-year fixed-rate mortgage of 3.27% is nearing the lowest rates ever recorded by Zillow, which took place in late 2012.
“Compared to everything else going on in the world, U.S. mortgage-backed securities now seem like a relatively safe bet for global investors, and this flight to safety has created savings opportunities for U.S. homeowners and those who want to buy,” said Erin Lantz, vice president of mortgages for Zillow Group.
“The drop in rates following the vote sparked an influx of refinance activity, and may also be encouraging home shoppers to move quickly and lock in a rate,” Lantz continued. “That said, while mortgage rates are a key factor when buying a home, it's important to remember that affordability is rarely determined solely on the rate you can get. The harsh reality is that if you couldn't afford a house a few weeks ago, you likely still can't.”