What Brexit means for the housing market
I am an Englishman and my daughter is a currency analyst in London so it has been an exciting few days in this family!
The immediate response to Brexit was the usual flight to safe havens – including the US dollar and US Treasuries. Since 30 year Fixed Rate Mortgages (FRM) are priced off the yield on the 10 year US Treasury, mortgage rates eased on Friday and are likely to continue at current low levels or go even lower.
I am written consistently over the last year that I have not understood the arguments that the Federal Reserve has been using to justify its intention of raising short-term interest rates (which affect things like credit card and auto loan rates, but not FRM rates), while pointing out that the Fed waited too long before raising rates last December and spent too much time telling the world its every thought on the matter.
In fact, the Fed’ s behaviour reminded me of that great line in The Good, the Bad and the Ugly, when Eli Wallach shoots the man who is explaining at length all he has gone through learning to shoot with his left hand: “When you have to shoot, shoot, don’t talk.”
So what now? The relevant factor for the housing market is that the vote by the UK to leave the EU should end any discussion about interest rates rising in the US. And however much the Fed claims to be apolitical, it is very unlikely it will raise interest rates as we get closer to the election in November. In fact, it is possible that following Brexit we will see moves to lower interest rates elsewhere and the pressure may build for the US to lower rates again. Thus, today’s very low mortgage rates are not going away any time soon.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated