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The Brexit vote has directly impacted interest rates in the United States. This summer is a good time to shop for a home mortgage as analysts are predicting rates may drop even further. Good opportunity for those who are home shopping, looking at real estate as an investment or looking to refinance their existing home loans.

Brexit could prove advantageous for borrowers in real estate market

Posted: Friday, July 1, 2016 12:00 am By RHETT MORGAN World Staff Writer

Married and a father of four children, including a newborn, Tulsa’s Mike Guillen was seeking ways to save money.
A refinancing opportunity gave him one.

Guillen this week secured a 15-year, fixed-rate of 2.87 percent on his home near 101st Street and South Memorial Drive, a drop of more than one point from his previous rate.

“It was just too good of a deal to pass up,” said Guillen, who works for a local heat-and-air company. “I was floored.”

He purchased his family’s 3,300-square-foot home about seven months ago.

“After looking at the math — because I was going to do the house pay-down account — I’m going to come out more ahead by having a low interest rate than I would have by putting the money in the bank and trying to earn on it,” Guillen said.

In the wake of the United Kingdom’s decision to leave the European Union, stories such as Guillen’s could become increasingly more common.

The move, also known as Brexit, has some analysts predicting that rates could drop even further.

“The latest statistic I saw is that we are in a three-year low of interest rates again,” said Ed Adams, who leads the retail mortgage channel for Tulsa-based BOK Financial Mortgage.

“We continue to be in a place where there are historically low interest rates, which presents a real good opportunity for buyers who are thinking about home ownership or refinancing or move-up opportunities or real estate as an investment.”

Thirty-year, fixed-rate mortgages have been hovering in the 3.5-percent range, he said.

“People still believe you need a 20-percent down payment to buy a home when you look at national surveys,” Adams said. “The truth is, there is a lot more opportunity. There’s a lot more product available to help with low down payment-type loans and options to get into home ownership.

“The continued pressure to keep interest rates down and what recently happened with Brexit is certainly providing opportunity for people to think about real estate as an asset and a part of their total net worth.”

Bankrate.com, which puts out a weekly mortgage rate trend index, found that almost half of the experts it surveyed believe rates will remain relatively unchanged in the coming week while a third believe they will fall further.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average plunged to 3.48 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.56 percent a week ago and 4.08 percent a year ago.

Since the beginning of the year, the 30-year fixed rate has plummeted nearly 50 basis points. (A basis point is 0.01 percentage point.) It has fallen 18 basis points in the past month alone.

The 15-year fixed-rate average sank to 2.78 percent with an average 0.4 point. It was 2.83 percent a week ago and 3.24 percent a year ago.

The five-year adjustable rate average dropped to 2.70 percent with an average 0.5 point. It was 2.74 percent a week ago and 2.99 percent a year ago.

“In the wake of the Brexit vote, the yield on the 10-year U.S. Treasury bond plummeted 24 basis points,” Sean Becketti, Freddie Mac chief economist, said in a statement. “This week’s survey rate is the lowest since May 2013 and only 17 basis points above the all-time low recorded in November 2012. This extremely low mortgage rate should support solid home sales and refinancing volume this summer.”

Source: http://www.tulsaworld.com/business/realestate/brexit-could-be-prove-advantageous-for-borrowers-in-real-estate/article_60e96d62-4312-5e49-a494-1774f9e7326e.html