Brexit Benefits Rates

Dated: 07/12/2016

Views: 472

The improvement in U.S. mortgage rates continues as the financial markets consider the impact the British vote to leave the European Union (Brexit) may have on global economic conditions. Mortgage rates have fallen to the best levels in years.

Brexit has been good for mortgage rates. It has caused investors to expect increased uncertainty, slower global growth, and additional central bank stimulus. The combination of these factors has helped push bond yields in many countries to record lows.
Investors have responded to the uncertainty by shifting their holdings to safer assets, like bonds and U.S. mortgage-backed securities. The added demand for government-guaranteed debt has pushed bond prices higher and yields lower, especially in the stronger countries.
Investors expect that Brexit will lead to slower economic growth in Europe. Individuals and businesses may hold off on decisions to commit capital until the terms of Brexit are known, and the negotiations could take years. In addition, the already weak banking system in Europe may suffer further from Brexit, constricting the availability of the capital needed to grow. Slower growth reduces inflationary pressures, which is good for mortgage rates.
As a result of Brexit, officials from the Bank of England said that further stimulus likely will be needed to incite economic growth in the United Kingdom. The European Central Bank (ECB) also may need to add stimulus. In addition, Brexit likely will cause the U.S. Fed to wait longer before raising the federal funds rate. Accommodative central bank policy has been good for mortgage rates.

Source: MBS Quoteline

Blog author image

David Sarnowski

David is a seasoned real estate professional, specializing in residential sales, rentals and investment properties. David is a 15 year resident of the New Jersey Gold Coast, with the local knowledge n....

Want to Advertise on this Site?

Latest Blog Posts

3 Tips To Consider When Buying A Home With An FHA Mortgage

3 Tips To Consider When Buying A Home With An FHA Mortgage FHA loans are becoming increasingly popular these days as potential homeowners may not able to qualify as easily for conventional

Read More

Questions And Answers Regarding Escrow Accounts

Questions and Answers Regarding Escrow Accounts Whether you are purchasing a new home or you are considering applying to refinance your home, chances are the lender will require an escrow account.

Read More

Whats Ahead For Mortgage Rates This Week February 20th 2018

What’s Ahead For Mortgage Rates This Week – February 20th, 2018 Last week’s weeks economic releases included readings on the NAHB Housing Market Index, housing starts and building permits

Read More