After months of divisive rhetoric on Britain’s exit from the European Union (or “Brexit,” as it is known), voters went to the polls on June 23 stunning investors by opting to leave the economic and political partnership of 43 years.
Many investors had been playing it safe for weeks ahead of the vote, moving their dollars into less risky Bond markets as speculation over the potential economic fallout amped up. And in the immediate aftermath of the vote, Stocks took a beating in markets around the world while Bonds here at home benefited.
This is an important story for homebuyers and homeowners who are considering a refinance. Home loan rates are tied to a type of Bond called Mortgage Backed Securities. When Bond prices improve, home loan rates tend to improve as well.
World markets will likely be volatile for some time as they digest the “Brexit” fallout. Mortgage Bonds and home loan rates here at home could continue to benefit from the uncertainty.
More Surprises Here at Home After weeks of talking up the economy, Janet Yellen and the Fed changed its tune following June’s Federal Open Market Committee (FOMC) meeting. In Yellen’s remarks, she noted economic growth was “relatively weak” in late 2015 and early 2016, job creation has slowed markedly, and household spending slowed despite increased household income and consumer sentiment.
However, there was some positive economic news to note. Retail Sales grew for the second straight month in May, as sales at clothing stores, online retailers, restaurants and bars all grew solidly.
On the housing front, homebuilder confidence in June reached its highest reading since January 2016, seeing increased expectations regarding current sales conditions, sales expectations in the next six months, and buyer traffic. Sales of existing homes also saw a boost in May – read more about that below.
The bottom line is that home loan rates remain near historic lows. If you have any questions about housing or home loan rates, or if you’d like to discuss your unique situation, please call or email today.