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Market Trends

 

What does Brexit mean for mortgage rates?

 

Well, the Brits did it. Surprising many in the financial world, Britain voted to break away from the European Union. That has caused turmoil in the global markets with stocks getting crushed in every relevant open exchange. This is great news for mortgage shoppers because scared stock investors usually shift funds into bonds for safety, hence the huge rally in U.S. bonds. It also makes a Fed rate hike late next month highly unlikely. It also raises the possibility of them not acting the rest of the year.

 

Friday’s bond market opened sharply higher as the markets react to Britain’s vote. The opposite reaction of a bond rally often is weakness in stocks and we are seeing plenty of it. The Dow and Nasdaq were down significantly. The bond market was up, which should improve mortgage rates by approximately .375 of a discount point.