The real estate market is proving to be a great long-term investment and thanks to Brexit it’s an even better time for property investors. According to Freddie Mac the rate for a 30-year-fixed mortgage is the lowest it has ever been since May 2013, giving home buyers a rate as low as 3.48%. Only last year the rate was 4.08%.
So what is the cause of the decrease mortgage rate? The drop can be attributed to the U.K.’s choice to opt out of the European Union, know as Brexit. Not only did this decision effect 30-year-fixed mortgages, but it also had a slight effect on 15-year fixed mortgages and the U.S 10-year Treasury. In the last week 15-year fixed mortgages decreased from 2.83% to 2.78%. The U.S. 10-year Treasury dropped to 1.45% this week; it’s an important number because it’s a benchmark for consumer loans.
Senior economic analyst as Bankrate, Mark Hamrick, comments, “Obviously it’s a good time for anyone who is in the market for a home purchase or had been on the proverbial fence about refinancing.”
The U.K.’s decision to pull away from the European Union was a catalyst for a massive selloff of $3 trillion on the global stock market.
Experts believe that foreigners see the U.S. as a stable market in this political and economic climate that has been created by Brexit. This will cause foreigners to being looking for property investments with the U.S.
What does this mean for U.S. homebuyers? Lately, there has been low inventory and a high demand which has prices crawling back up. Thankfully, this decrease in home loan rates offsets affordability a lending requirement issues buyers are having. According to the S&P/Case-Shiller National Home Price Index home prices have increased 5% in April of last year.
Hamrick states, “When you are seeing this continuous 5% increase year over year in home prices without an accompanying increase in either wages or incomes, what can’t go on forever does not.”
Bottom line, Brexit could be that breathe of fresh air homebuyers have been looking for. If you’re a property investor consider getting a property manager, so that you don’t have to worry about getting random late night calls from tenants or even have to evict them.
Contact SOS Management & Property Services
Local: (858) 273-8800
