After last week’s vote where Britain voted to leave the European Union, the financial markets have started to react and it appears that it may be the start of a “new normal” for a while.
Upon the votes being counted and once it was clear that Britain was going to leave, investors flocked to buy up US treasury bonds and mortgage bonds.
As a result of this decision, mortgage rates in the US went to new lows and they don’t look like they will rise anytime soon.
The more uncertainty there is in Europe over what other country may be leaving the EU next, the more investors “fly to quality” which means more buying of US bonds.
More buying US bonds means lower mortgage rates.
US Mortgage Rates: What’s Next after Brexit?
In the coming months, multiple other countries will also be considering leaving the EU. Will Frexit (France) happen? Maybe Noexit (Norway)? Italy, Austria, Sweden and Germany? While any outcome is possible, one thing is certain: it is a real possibility that any (or all) of these countries could decide to leave the EU – the outcome is uncertain. And typically investors don’t like uncertainty. Uncertain investors look for the highest quality possible (often called a “flight to quality”) and the US bond market is the highest quality investments available. Higher demand for bonds means rates go lower.
What this means for the US mortgage rates market is this: most experts predict that US mortgage rates will drift lower and stay there for some time. Will mortgage rates for the benchmark 30 year fixed mortgage rate go below 3% and into the 2% range?
It appears likely.
What Mortgage Rates Will Be In The 2’s First?
Not all mortgage products are the same – hence, not all mortgage products have the same interest rate. When it comes to mortgages, some of the common mortgage programs include FHA, VA and Conventional loans – with each program having both an adjustable and a fixed rate product.
Many adjustable rate mortgage products have been in the 2% range for some time – but there soon may be fixed rates in the 2% range as well.
If mortgage rates go to the 2% range, it will first be found in the government-insured FHA and VA fixed rate loan programs. This means that anyone who currently has an FHA or VA loan will be able to use the FHA streamline or VA streamline refinance program and lower their rate from a higher rate to a lower rate.
After government loan programs break into the 2% range, the next loan programs that will offer mortgage rates in the 2% range will be conventional loans followed by jumbo loans.
Get The Best Deal
The single most important thing you can do to get the best mortgage rate possible is to speak with multiple lenders who can give you a written quote. Getting a quote is free and easy, and once you have multiple quotes you can compare and see which lender can help you save the most money.
Mortgage rates change multiple times a day and it isn’t uncommon to speak to a lender one day and get quoted one rate only to speak to them the next day and get a different rate.
Many people are also interested in not only getting a lower interest rate but also getting some cash out of the equity in their home to pay off bills, consolidate debts or use for home improvements or other purposes.
Shopping for a lender to help you get a lower interest rate on your mortgage? Start here – getting a rate quote from a lender is free, easy and only takes a couple of minutes.