The world watched as Britain voted to leave the European Union. The world was surprised if not shocked. The vote shocked not only the world but also the stock market. This vote known as Brexit also brought about quickly dropping U.S. mortgage rates, according to realtormag.realtor.org. Not only did the rates drop, they dropped to “the lowest average in more than three years, and economists expect them to head even lower.” As a result, very quickly, U.S. homebuyers and owners gained “greater buying power.” According to Jonathan Smoke, realtor.com’s chief economist, those who are “well qualified” can afford a home “8% more expensive” than they could at the start of 2016.
That is the upside, but there is a downside as well.
Lower mortgage rates can cause “stricter underwriting standards.” In other words, a decline in mortgage rates can bring about a “decline in credit access.” With lower rates, increased service and origination costs and thus declining profit margins, lenders have become more “risk averse.” So, for those who are “well qualified,” now might just be a good time to buy that new home. When buyers have more buying power, listing one’s home could be a smart move too. Visit your local RE/MAX office today, RE/MAX Advantage Realty, check out its website further or visit RE/MAX.com to get started.