NEW YORK – June 29, 2016 – Ever since Britain's surprise vote to leave the European Union, U.S. homebuyers and homeowners have been reaping an expected benefit – quickly dropping mortgage rates. The cost of the average fixed-rate mortgage is hitting its lowest point in more than three years – and economists expect them to head even lower.
On Monday, the 30-year fixed-rate mortgage averaged 3.46 percent, near the lowest average since late 2012, realtor.com reports.
"Lower rates produce lower monthly payments and greater buying power – those who are well qualified can afford a home that's 8 percent more expensive than at the beginning of the year," says Jonathan Smoke, realtor.com's chief economist. "That's more than enough to offset the rise in prices during that time."
That said, low mortgage rates could prompt lenders to get stricter with underwriting standards, Smoke adds.
"As mortgage rates declined this year, we've seen that credit access has gone down too," he notes. "That's because lenders have become more risk-averse as their profit margins have been whittled down by the double whammy of lower rates and higher origination and servicing costs."
Source: "Thanks, Brexit! Well-Qualified U.S. Buyers Reap a Windfall," realtor.com® (June 28, 2016)
David has been a Realtor in Florida for more than a decade and has extensive knowledge of finances.