Since two weeks ago, when the British voted to withdraw from the European Union, every segment of the US economy has drastically changed. Stock values have decreased (even internationally), the pound has dropped well below the value of the dollar, and trade with Great Britain has begun to shift. The housing market is no exception to these substantial changes.

According to Urban Wire, a well-established research network, Brexit has driven mortgage rates to extraordinary lows, as they mirror shifting treasury yields. Although the effects of this drop may be delayed, these low mortgage rates will certainly affect the housing market. Experts predict that the following may change throughout the summer’s upcoming months:

1. Increase in refinancing: As we discussed in last week’s blog, “Brexit Could Drive Mortgage Rates To Historic Lows This Summer,” low mortgage rates have had a large impact on refinancing. In fact, mortgage applications have drastically increased since the beginning of June, and experts predict these numbers will only increase within the next couple of months.
2. Danger for this quarter’s Freddie Mac: Also known as the Federal Home Loan Mortgage Corporation, Freddie Mac directs money to mortgage lenders throughout the country to promote rental housing and homeownership for middle income Americans. With treasury rates dropping, Freddie may report another round of monetary loss. This may sound alarming, but with an increase in refinancing and home buying, the mortgage process should continue without a problem.     
3. Shortened term of MBS investment: With an increase in refinancing, mortgage-backed securities are predicted to have shorter terms of investment and reduced investment returns. In this case, make sure your investment balances your risk tolerance. Your mortgage officer can help you weigh these elements.

Overall, the US housing market is expected to considerably change throughout the upcoming months. With today’s low mortgage rates, it is a great time to consider refinancing or home buying. For more information about the housing market, mortgage rates, or refinancing, contact one of our mortgage loan officers today.