Rates experience a Brexit retreat

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“The British are coming! The British are coming!” Those are the immortal words that Paul Revere’s called out in 1775 as the British troops were coming arrest Samuel Adams and John Hancock. But in 2016, the British are leaving, the British are leaving. Leaving the European Union.

The Brexit vote that occurred in June surprised many in the financial services industry, with experts anticipating a vote that would leave Britain in the European Union. This spooked the equity market, triggering a 900-point drop in the two days after the vote. But the equity market’s loss was the mortgage market’s gain.

The uncertainty pushed mortgage rates down to about .125 of a point above the 2012 all-time lows. This has been a great boost to people buying homes, and has also sparked a refinance rally.

At press time, the 30-year fixed is approximately 3.375 percent, the 20-year is 3.25 percent, the 15-year is at 2.75 percent and the 10-year is at 2.625 percent.

It is likely that we will continue to see low rates for the near future as investors are looking to the U.S. interest-rate market for a decent return on their money.

Many counties throughout the world now have negative rates for certain bonds and savings instruments. This pushes investors to the U.S. to buy bonds, which pushes up bond prices. When bond prices go up, the yield or rate goes down.

As long as we still have a high demand for our bonds we, will continue to see low rates. And if we should see another country leave the European Union, it is anyone’s guess how low our rates can go.

To contact me, call 773-557-1000 ext. 15, e-mail ron@ronmortgage.com or visit http://www.ronmortgage.com.


About Ron Ricchio

Renato (Ron) Ricchio is president of Chicagoland Home Mortgage. He grew up in Westchester and attended St. Joseph High School and DePaul University, taking a job as a loan officer in the mortgage industry soon after graduating with a bachelor's in finance in 1991. He started his own company in 2001, which he operates today. He has been ranked in the top 150 loan originators in 2010 and 2011 by Origination News. Ron is happily married with three beautiful children. A board member of San Francesco Di Paola Society and the founder of Ricchio Family Toy Drive for Lurie's Children's Hospital, he enjoys cooking and spending time with family and friends.

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