Britain’s vote to leave the European Union shocked many and left Americans wondering what effect the action would have on our economy. International concerns play a large role in the mortgage-backed security market. As a general rule of thumb, when there is risk or danger in the financial markets, investors and speculators tend to flee to ‘safe haven’ assets, such as U.S. treasury bonds and U.S. mortgage-backed securities. This typically results in lower mortgage rates and mortgage-bond purchasing leads to higher prices and lower bond yields.
For Americans who have been waiting for one reason or another to refinance, now is the time to act. Rates are back at historic lows and the Federal Reserve is likely not going to be raising short-term rates again for a while. Investors are putting their funds toward the safest assets, such as U.S. Treasuries, mortgage -backed securities, and gold. According to financial analysts, this won’t last long. Homeowners are urged to act quickly, and lock in rates as soon as possible.
The Brexit vote and ensuing turmoil in Europe also strengthened the U.S. dollar overseas. As a result, imported goods, such as German automobiles or appliances, could also see some price improvements over time with a stronger U.S. dollar, along with a decrease in the cost of traveling to Europe.
It is certainly worth a conversation this week about where your mortgage rate is and whether or not our team here at Fairway can help you save money each month. Call me ASAP to discuss where rates are and how I can assist you with a quick refinance for your home. If you have been considering moving to a new home, we can talk about your options as well, as there may not be a better time to buy in 2016 than in the coming weeks and months!