Mortgage Rates and Brexit

Mortgage Rates: A New Low For 2016. Thanks, Brexit!

by
Updated on October 6th, 2020

Mortgage rates hit a new low for the year, falling to 3.48 percent after Britain voted for a divorce from Europe. Last week, the average 30-year fixed-rate loan was 3.56 percent, according to Freddie Mac. A year ago it was above 4 percent.

We’re this close to the record low 3.31 percent rates posted in November 2012. Back then, borrowing costs hit rock bottom because there wasn’t much demand for loans in the wake of Hurricane Sandy. Stock prices were falling, too, sending big investors in search of a safe place to park their money. That flight to financial safety typically sends mortgages rates down.

mortgage rates and Brexit
Source: Freddie Mac

This time, as predicted, mortgages are being driven down by news out of Britain, which last week voted to leave the political and economic embrace of the European Union — the now-infamous Brexit. That sent the 10-year Treasury bond yield plummeting, dragging mortgages down with it, as investors looked for shelter in an uncertain market.
“This week’s survey rate is the lowest since May 2013 and only 17 basis points above the all-time low recorded in November 2012,” Freddie Mac chief economist Sean Becketti said. “This extremely low mortgage rate should support solid home sales and refinancing volume this summer.”
MoreBoom! Brexit Hits Home. Here’s What You Need to Know
Shockwaves from the Brexit vote haven’t completely subsided, meaning rates will stay low for the time being and might even fall further. At the same time, stock prices in the U.S. have bounced back, which is good for consumer pocketbooks. As news from Europe dominated headlines all weekend, Redfin data showed no evidence of buyer unease.

“More buyers toured homes compared to this time last year and we saw more people signing purchase contracts,” Redfin chief economist Nela Richardson said. “Rates were already low before. Now that they’ve fallen again, we might even see an uptick in demand heading into July.”
 

mortgage rates and Brexit
Source: Freddie Mac
Avatar

Lorraine Woellert

Lorraine is enjoying her first real job after a career in journalism. She’s based in Washington, D.C., where she writes about housing and the economy. Before joining Redfin, Lorraine was at Bloomberg News reporting on politics, financial mayhem, housing and the economy. Her dream home is a top-floor loft with a pool, friendly neighbors and a terrace for throwing parties. Everyone's invited. Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster. For more information about working with a Redfin real estate agent to buy or sell a home, visit our "Why Redfin?," page.

Email Lorraine

Leave a Comment

Your email address will not be published. Required fields are marked *

Be the first to see the latest real estate news:

  • This field is for validation purposes and should be left unchanged.

By submitting your email you agree to Redfin’s Terms of Use and Privacy Policy

Scroll to Top