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Posted 06/30/2016


Brexit : Mortgage Rates At 164-Week Record; A Whisper Away From All-Time Low


Mortgage Rates 0.17% Away From Breaking All-Time Record

Mortgage rates are falling fast, and 30-year rates in the 2s may soon be here.

Freddie Mac, in its weekly survey, reported that the 30-year fixed rate hit 3.48%, the lowest level since May 2013, and only 17 basis points (0.17%) above the all-time low recorded in 2012.

Now is the time to lock your loan.

Five-year adjustable mortgages and 15-year fixed rate loans are solidly in the 2s.

Home buyers and refinancing households simply couldn’t wish for a better time to shop for a mortgage rate.

We are now seeing some of the lowest mortgage rates we’ll see in our lifetime.

Click to see today's rates (Aug 21st, 2017)

The Brexit Effect On Freddie Mac’s Survey

Each week, mortgage agency Freddie Mac surveys more than 100 lenders nationwide.

It asks these mortgage companies, banks, and credit unions what mortgage rate they would offer a well-qualified borrower.

Freddie Mac polls lenders from Monday through Wednesday for their Thursday release.

This week, that happened to be a very interesting period in mortgage rate history.

Mortgage rates were in free fall thanks to the “Brexit effect.”

Brexit is a term that describes Great Britain’s vote to leave the European Union (EU), a group of 28 countries -- poised to become 27 -- that is meant to bring economic and political stability to the region.

Britain’s move was unprecedented. No country has ever left the EU, only joined. The vote sparked uncertainty in world markets. Would Britain’s exit lead a wider recession? Would other EU countries be emboldened to leave, spawning untold instability in Europe?

No one knew. And they still don’t. This uncertainty caused a flight to “safe” investments such as those tied to U.S. mortgages. Demand for mortgage-backed investments skyrocketed, and rates fell.

Monday and Tuesday of this week saw lenders race to the bottom, issuing rate sheets that nearly matched those of November 2012, the month that saw the lowest mortgage rates ever recorded.

The downward spiral picked up steam just as Freddie Mac started polling lenders.

The result: rock-bottom rates reported in this week’s release.

Click to see today's rates (Aug 21st, 2017)

Can I Still Get Brexit Mortgage Rates?

Mortgage rate activity over the past six weeks has been impressive. Just when we think rates can’t go any lower, they do. The following shows just how difficult it has been for mortgage rates to move up.

  • May 26: thirty-year fixed rate of 3.64%
  • June 2: thirty-year fixed rate of 3.66%
  • June 9: thirty-year fixed rate of 3.60%
  • June 16: thirty-year fixed rate of 3.54%
  • June 23: thirty-year fixed rate of 3.56%
  • June 30: thirty-year fixed rate of 3.48%

Though Freddie Mac’s weekly survey reports days-old information, mortgage rates have remained at post-Brexit levels seen earlier this week.

Mortgage rates were already scraping bottom before Brexit burst onto the scene. Anyone who locked their rate hours or days before Brexit still got an incredible rate.

Then Brexit happened, and rates went even lower. It could be time to lock, if this week’s mortgage rates have not already convinced you to do so.

Click to see today's rates (Aug 21st, 2017)

Should Mortgage Consumers Lock Their Rate Now?

Whether you are buying a home or refinancing, mortgage applicants will get a rate near all-time lows if they lock now. Still, the decision depends on whether you own a home now or are looking to buy one.

Mortgage rate locking for home buyers

For those purchasing a home, there is little risk by taking advantage of current rates. Mortgage rates, after Brexit, have more room to rise than to fall further.

Home buyers tend to be on a tight timeline. They sign an agreement to close the transaction, typically within thirty to sixty days. Rates could be as low now as they will be during that period.

FHA-approved home buyers can access FHA mortgage rates in the low 3s; This type of loan is government-backed, meaning buyers using this program are entitled to rates about about one-quarter of one percent lower than rates for conventional mortgages.

The VA home loan and USDA mortgage are other government-backed options and come with ultra-low rates as well.

Even low-downpayment conventional loan rates are clocking in at historic lows. The HomeReadyTM program requires just a three percent downpayment, or $3,000 for every $100,000 in home price.

HomeReadyTM considers the income of household members who are not on the loan application, but who live in the home and contribute income.

All loan types come with very low rates, and any home buyer who locks in now will be taking advantage of some of the lowest rates in history.

Click to see today's rates (Aug 21st, 2017)

Rate locks for refinance applicants

Refinancing homeowners typically consider their current rate when deciding when to lock their rate, or whether to refinance at all.

Rates have been low for some time. That means homeowners who purchased or last refinanced a home in the past five years may already have a very low rate.

But rates went lower still, so homeowners are again considering potential savings afforded by a refinance. The following list details approximate savings based on the refinance of a $250,000 loan amount.

  • 0.25% reduction in rate: $35 per month savings
  • 0.375% reduction in rate: $53 per month savings
  • 0.50% reduction in rate: $71 per month savings
  • 0.75% reduction in rate: $107 per month savings
  • 1.0% reduction in rate: $144 per month savings

At today’s rates solidly in the 3s, many homeowners with a low rate already in the 4s can potentially experience big savings.

A refinancing homeowner may want to lock immediately. Rates are holding at low levels comparable to when the news about Brexit first broke.

Dramatic shifts in mortgage rates, as we are seeing due to Brexit, don’t come around very often. If rates rise, they may stay at elevated levels longer than a homeowner wants to wait.

Refinancing households may not do much better than they could by locking in right now.

Click to see today's rates (Aug 21st, 2017)

Refinance Programs Help Homeowners Capitalize On Today’s Rates

Refinance programs exist for almost every type of homeowner.

The popular FHA streamline refinance drops the rate of homeowners who have an FHA loan currently. It does not require an appraisal, so the home’s current value won’t impede the approval. Lenders don’t ask for paystubs, W2s, or tax returns either.

Likewise, the VA streamline is a VA-to-VA refinance that requires very little documentation and take just weeks to complete.

The HARP refinance is a program designed for homeowners with conventional mortgages owned by Fannie Mae or Freddie Mac. The home’s current value doesn’t matter; even underwater homeowners qualify, often without an appraisal.

Streamline refinance programs take less time and energy to complete. Some homeowners delay a refinance because they believe it will take too long or require too much effort.

But these programs make the decision easier: the process is fast, and the homeowner can start enjoying lower payments with very little distraction from their usual responsibilities.

What Are Today’s Rates?

Mortgage rates are bottoming out, and may not go much lower. Rates are just a whisper away from all-time lows mid-way through a year when analysts said rates would rise.

Rates dropped in 2016, and home buyers and refinancing homeowners are benefiting.

Get a rate quote and lock in today’s rates. No social security number is required to start, and all quotes come with instant access to your live mortgage credit scores.

Click to see today's rates (Aug 21st, 2017)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2017 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)