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.
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.”
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.”