Brexit Brings Lower Mortgage Interest Rates
The Brexit has brought mortgage interest rates down, and that’s great news for U.S. real estate.
While not everyone is happy with the fallout of the British decision to leave the European Union it could prove to be a great thing for many American real estate buyers, sellers, and investors.
The Brexit crushed the stock market, caused banks billions in losses, setup US and EU banks for over a trillion dollars in cash short fall, and even resulted in funds freezing customer withdrawals from London property investments. That may be sadly catastrophic for many, but there is hope for those that have been able to cash out of those other investments.
The Bank of England is pushing banks to make lending easier, including lowering interest rates. Bankrate.com reveals that U.S. mortgage rates have also fallen back to almost the record low we saw 4 years ago. As of July 14th, 2016 that meant 30 year fixed home loan rates at just over 3%, and 15 year fixed mortgage rates in the 2% range.
Low interest rates could be awesome news for property owners that have been wanting to refinance, as well as buyers who thought they missed the boat. Sellers too could find this a powerful time to sell since low rates mean borrowers will be paying less monthly for higher priced homes.
The bad news is that there is even less hope of earning good returns on savings or other investments except for real estate. Long term property price sustainable could also be even more threatened due to the current and going artificial manipulation of markets. Banks aren’t making much and don’t have much of a cushion when they are lending at 2%. When interest rates go higher home mortgage payments could easily double, even if prices don’t go up. All together this may appear to some as being just a little too reminiscent of the setup of the early 2000s.
Fortunately there could be some highly profitable sweet spots out there for property investors. The first is noting that if Brits pull back from some market it could provide better buying opportunities for domestic investors. The ensuing demand for U.S. real estate from other foreign investors could then help beef up spreads on flips. Those that stick to wholesaling real estate can benefit by leveraging cheap money now, and avoiding being stuck when rates go up later or cracks appear in the markets.
Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.
