Fixed mortgage Rates UK

Thirty-year fixed rates approached all-time record lows in the wake of the vote. Will they continue to drop?

Financial market turmoil can be good for mortgage rates. Don’t forget this concept as you continue to read headlines about how a “Brexit” is wreaking havoc on markets.

Brexit is slang for Britain’s vote Thursday, June 23 to exit the European Union (EU), which is a political and economic union allowing free trade and movement of people among 28 member countries.

This outcome was unexpected, and caused stock markets around the world to nosedive.

Mortgage rates approach record lows

The Brexit vote also caused U.S. mortgage rates to nosedive. Rates were down .125 percent the day after the Brexit vote, and are now approaching all-time record lows as 30-year fixed rates move below 3.5 percent.

Why? Because Brexit uncertainty is causing investors to sell riskier global stocks and buy safer U.S. mortgage bonds — which are among the safest bonds in the world because they’re comprised of U.S. home loans approved using the strictest guidelines in decades.

When bond prices rise on this buying, bond yields (or rates) drop. When rates drop, it’s often a good time to refinance your mortgage.

To put it in perspective: On a $300, 000 loan, if you refinanced at a rate dip of .25 percent, your payment could be lowered by $42 per month.

Mortgage rate outlook from here

When markets are driven more by politics than economics, rate movement will be especially unpredictable. If this Brexit-driven rate dip meets your financial objectives, you should work with your lender to refinance at this lower rate.

If you have the stomach to watch rate markets a bit longer, Brexit isn’t the only factor driving lower rates. Forthcoming Brexit negotiations may inspire other EU countries to seek independence, which would fuel market turmoil and keep U.S. rates low.

This sentiment has already caused the Federal Reserve to pause its rate hike campaign, citing non-U.S. factors as contributing to increased risk of U.S. recession.

These conflicting predictions mean rate movement will be especially unpredictable in the coming months, so it’s best to lock rate dips that meet your financial objectives. Your lender can help you with your objectives and mortgage math.