Mortgage Update - Brexit's effects on the mortgage industry
by Kris Barros
While Brexit from the EU is wreaking havoc on stock markets across the globe, there is no denying that the favorable impact on mortgage rates should have lenders and Realtors® screaming like school girls watching the Beatles perform on the Ed Sullivan Show. For the potential home buyer every open house this weekend should be the hottest ticket in town.
Mortgage rates are back to historic lows. According to Bankrate, the average 30-year fixed-rate mortgage is 3.51%. At this rate, buyers pay about $450 per month in principal and interest for every $100,000 borrowed. For $1,350 a month buyers can get a $300,000 mortgage. The average 15-year fixed-rate mortgage is around 2.69%. The usual trade off of paying more per month for the shorter term become less concerning at these rates. The monthly payments on a 15-year loan at 2.69% are around $676 for every $100,000 borrowed. Taking a 15-year mortgage would mean many Millennials could be mortgage free before their kids reach college.
This does appear to be a summer event. Even with the impact of the Brexit, most believe mortgage rates will rise by year end. Outside of a fairly anemic jobs report last month, the U.S. economy is fairly healthy with wage growth nearing pre-recession levels and unemployment figures as low as they have been in about 9 years. At a minimum, this will have the Fed still considering rate increases before year end.
What is left of this summer should be spent on the streets with flyers announcing this summer’s low mortgage rate show. Lenders and Realtors® need to take on the persona of a carnival barker attempting to attract as many potential homebuyers to this summers show as possible. It shouldn’t take more than a brief description of the low rate attraction and emphasis on novelty and beauty of record low rates to incite homebuyers to attend. Of course the “record low” rates made what we thought was a farewell tour in 2013 but there is no harm in making this another low rate farewell tour.
So while the British stagger across the world stage belting out that classic Clash hit deciding whether they should stay or they should go let’s forget about the financial market trouble and just enjoy the low mortgage rate show touring the US this summer.
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