Just over a month ago, the United Kingdom decided to withdraw from the European Union in a decision commonly known as Brexit. At that time there was a lot of speculation on how that decision would impact the Connecticut residential mortgage market. Today, I want to share the impact of the first 30 days.
Most believed that the Brexit decision would drive Connecticut mortgage rates down and keep them down for some time. As CoreLogic reported:
“First-time Connecticut buyers can count on continued low mortgage rates to help with affordability issues. Similarly, re-setting adjustable rate loans will have less of a rate shock, and in some cases may even go down.”
What has actually happened?
Initially, rates did fall. However, Freddie Mac has reported that rates have stabilized and have actually increased marginally each of the last two weeks. This prompted Freddie Mac Chief Economist Sean Beckett to say:
“Post-Brexit volatility tapered off over the last two weeks, allowing Connecticut interest rates to bounce back a bit from their near-record 30-year mortgage rate lows.”
And, Capital Economics Property Economist Matthew Pointon believes Connecticut rates will continue to increase:
“Given we expect Brexit will have a minimal impact on the U.S. economy, we see no reason to change our forecast for Connecticut mortgage rates to reach 3.85% by the end of this year, and 5.0% by the middle of 2018.”
We will continue to follow the effect of Brexit on the Connecticut housing market. But for now, it appears the impact is not as dramatic as some thought it could be.
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