Ever since Britain’s surprising vote to leave the European Union, U.S. home buyers and home owners have been reaping an expected benefit — mortgage rates that are quickly dropping. Mortgage rates are now at the lowest average 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,” Jonathan Smoke, realtor.com®’s chief economist, writes in a recent column. “That’s more than enough to offset the rise in prices during that time.”
That said, low mortgage rates can prompt lenders to get more strict with underwriting standards, Smoke says.
“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)