By Jason Boone
Voters in Great Britain helped make home ownership more affordable for buyers in the United States. The effect isn’t huge, but it’s there.
The late-June “Brexit” referendum, which came down on the side of Britain leaving the European Union, had an immediate effect on U.S. financial markets. Stock indices plunged but recovered within a few days. Mortgage rates declined — and many experts believe they will remain at their historically low levels.
On June 30, Freddie Mac’s weekly survey of mortgage rates showed that the 30-year fixed rate declined by 0.08 percentage point the previous week to 3.48 percent. Those figures reflect an average of 0.5 point on the loan (points are fees paid to the lender; one point is 1 percent of the loan amount).
The 3.48 percent interest rate is the lowest since May 2013. Last year at this time, the 30-year rate averaged 4.08 points. This week’s rate is within one-fourth of a percentage point of the all-time low of 3.31 percent, recorded in November 2012. Freddie Mac has been tracking mortgage rates since 1971.
Rates on 15-year fixed-rate mortgages also declined after the vote in Britain, from 2.83 percent the week prior to 2.78 percent the week of June 30. These rates reflect an average of a 0.4-point fee.
Looking at a concrete example of how the change in rates would come into play, consider a home costing $374,000 (the median sales price in May in Bend) with a 20 percent down payment. According to an online mortgage calculator, the lower rates on a 30-year fixed-rate loan would mean a monthly savings of 13 dollars, compared with the previous week’s rates. For homes purchased with lower down payments, the savings would be slightly more.
A difference of 13 dollars a month might not be enough to move a buyer from the sideline and into the home-buying market. The lower rates, though, might induce more existing homeowners to refinance their loans. And the overall uncertainty of an exit from the European Union by Britain could persuade the U.S. Federal Reserve to not raise interest rates as frequently (or perhaps as much) as was planned earlier this year.
My knowledge of the Bend real estate market can help you find the right home at an appropriate price — regardless of interest rates. Likewise, if you’re a seller, I can help you market your home for maximum exposure.
To learn more about Bend home prices, get started with listing your Bend home or view area homes, contact me at (541) 383-1426 or via Bend Property Search to connect with me through my website.