When the citizens of the UK voted to leave the European Union, it sent shockwaves through the world economy. Overnight, stocks dropped and the pound weakened dramatically. However, the decision may also affect mortgage rates in the U.S. According to experts, rates may drop even more, breaking record lows set within the past months. Borrowers are cautioned that they should lock in their rates as soon as possible, however, because it is uncertain how long these low rates will last.
National Association of Realtors Chief Economist Lawrence Yun stated that these low rates, which have stayed around 3.7 percent in the past month, show that Americans are not confident that the market can financially support higher rates at the moment. While Brexit may affect these rates in the coming weeks, the already-low interest is due to a number of both foreign and domestic factors.
Many, however, do not expect Brexit to affect the market in the long term. Michael Fratantoni, the chief economist for the Mortgage Bankers Association, believes that by December 2017, interest rates will have climbed to 4.8 percent. If that occurs, it would put rates back at numbers unseen since 2009. He went on to say that he anticipates a rate of 4 percent by December of this year, although he added that he has lowered his expectations in the past months.
While he does still predict an increase, Fratantoni and many other experts are quick to point out that Brexit is unprecedented and its repercussions are unclear.