BREXIT (Britain’s Exit from the European Union) and The Housing Market

Friday, July 01, 2016 Written by 
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Now that much of the dust has settled, and the panic has waned, let's take a look at what impact Britain's exit from the European Union may have on the U.S. housing market. 

 

The most immediate impact of Brexit will be on mortgage interest rates. Interest rates have remained at historic lows for the last several years. Contrary to what many experts

believed, rates have remained low throughout the first half of 2016. 

 

What is the possible impact of Brexit on mortgage rates? 

 

In a recent article, the Washington Post explained: 

 

"Brexit has spawned the recent bout of volatility in global financial markets. That has anxious investors scurrying for safety -- and few assets are safer than U.S. Treasuries. High demand for government debt pulls down interest rates. 

 

That all translates into ultra-low mortgage rates for American households. And with Britain voting for Brexit, they could go even lower." 

 

However, the lower rates caused by Brexit may be short lived as Trulia Chief Economist Ralph McLaughlin pointed out in a recent post: 

 

"While the departure of the UK from the European Union has driven down the 10-year bond, and thus mortgage rates, we expect them to rebound later in the year as uncertainty over the economic consequences of the departure lifts." 

 

We really can’t be 100 percent certain of what the true impact will be down the road. Right now there is only speculation. The economic consequences of the BREXIT may be manageable or they could be dramatic. No one really knows. According to what I’m reading, it could actually put us in a recession in the long term. As the not-too-distant past reminds us, a recession brings lower income and higher unemployment, and that puts our housing market at risk. Anyone considering a housing move should definitely keep their eye on what’s happening in Europe. 

 

The bottom line is, while potentially damaging, none of this should alter home-buying or selling decisions today. After all, as McLaughlin said, the immediate impact is essentially cheaper money.  Rates are already at historic lows. The UK's exit from the EU almost certainly guarantees they will remain low (and possibly go lower) over the next few months. If you were thinking of buying your first home or trading up to the house of your dreams, this may well be the absolute best time to act. The cost of money may never be cheaper! And if you access money at a lower interest rate, it may put you in a stronger position to weather the storm that appears to be brewing (or maybe not).

 

Glenda Brass is a real estate consultant and trainer. Her offices are located at 2639 W. Manchester Blvd, Inglewood. For more information on buying, selling, or renovating real estate, contact Glenda at 310-345-9707 or This email address is being protected from spambots. You need JavaScript enabled to view it. .

 

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