Did you think that mortgage interest rates couldn’t get any lower?
If you haven’t heard, the United Kingdom recently passed a vote to exit the European Union. The EU is a political and economic union of 28 countries that allows free movement and trade.
The unexpected move out of the union by the UK has caused international stock markets to tumble. How will this affect you and your family with regards to the real estate market?
Investors worldwide are moving their money into more conservative investments such as the US bond market, because it is secured and guaranteed by the US government. There is reason to believe that more stock market turmoil could be on the way as other EU countries could potentially make exits, causing further volatility. The Federal Reserve has put its rate hike campaign on hold, citing non-U.S. concerns. This flight to safety by investors is applying downward pressure on mortgage interest rates.
For example, only 4 days after the ‘Brexit’ occurred and stock markets dropped, mortgage rates went down approximately 0.375%. Mortgage interest rates are falling to potentially historic, all-time lows.
So if you’ve been sitting on the fence thinking whether now is a good time to buy a home, you may want to take action while interest rates are so low. Or if you want to lock in the lowest rate possible on a refinance, you should have a conversation with your lender sooner rather than later.
In San Diego, the average single-family home’s sale price is approximately $733,000. Based on the average drop in rate, a buyer can now qualify for 3.75% more home. In other words, on a $733,000 purchase, they can now qualify to buy a $760,000 home, or just buy the same home with a lower payment.
This can also benefit you if you are a seller, because your pool of buyers has now increased with more qualified buyers at your sales price.
If you have any questions or need some great lending resources, please feel free to call or e-mail us.