Some two weeks into a post-Brexit world and mortgage rates are getting lower and closer to all-time lows.
On July 7, 2016, mortgage giant Freddie Mac revealed a further drop in rates for fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) to “new 2016 lows”.
Specifically, 30-year FRM dropped to 3.41% for the week ended July 7th, compared to the all-time low of 3.31% recorded in November 2012. Freddie Mac’s Primary Mortgage Market Survey (PMMS) results also revealed that 30-year fixed rate averaged 3.48% for the week before the surveyed period and 4.04% around this time last year.
Fifteen-year FRM also fell to 2.74% during the relevant week, averaging 2.78% during the previous week and 3.20% about a year ago.
Moreover, five-year Treasury-indexed hybrid ARM was at 2.68% for the week ended July 7, lower than last week’s 2.70% and last year’s 2.93%.
“Continuing fallout from the Brexit vote drove Treasury yields lower again this week. The 30-year fixed-rate mortgage followed Treasury yields, falling 7 basis points to 3.41 percent in this week’s survey,” Sean Becketti, chief economist at Freddie Mac, explained in the July 7 statement. “Mortgage rates have now dropped 15 basis points over the past two weeks, leaving them only 10 basis points above the all-time low.”
Home Buying, Refinancing Surge
The fallout following the U.K. vote to leave the European Union has delivered positive news to U.S. households. Some consumers have already taken advantage of today’s prevailing low rates for home purchase or refinance transactions.
Mortgage application volume rose to 14.2% for the week ended 1 July 2016, according to data released by the Mortgage Bankers Association (MBA) on July 6. Refinancing application volume also saw an increase of 21%, the highest recorded since January of 2015, based on the MBA’s Weekly Mortgage Applications Survey.
“Interest rates continued to drop last week as markets assessed the impact of Brexit, downgrading the likelihood of additional rate hikes by the Fed, and mortgage rates for 30-year conforming loans dropped to their lowest level in over 3 years,” MBA’s chief economist, Mike Fratantoni pointed out.
Refinances share in the overall mortgage activity also got bigger with 61.6% for the relevant week, the highest it has been since February 2016, compared to 58.1% of the previous week, the MBA Survey further noted.
Rates Could Go Even Lower
Low mortgage rates are expected to continue and may go even lower but nobody really knows. One thing’s for sure, refinancing/purchasing today would mean saving big on your monthly mortgage payments.
Planning to take out an FHA or VA loan, or refinance through FHA Streamline Refinance or VA’s IRRRL? Contact a lender now and ask how you can make the most of today’s low interest rates.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.