Brexit comments from a US lender
“Hi Marian! As I’m sure everyone knows by now, the markets were caught off guard after UK voters decided to leave the European Union yesterday by a vote of 52% vs 48%. Going in to the close yesterday, the probability of a jump was down to only 25%. What we’re seeing today is pure political and market chaos, on a Lehman-like scale.
As investors take risk off the table, we’ve seen a meltdown in stocks globally.
As of this morning Interest Rates were falling drastically as capital got reallocated in to safe haven investments like MBS (Mortgage-Backed Security) & USTs (United States Treasury.) Mortgages, because of the unpredictable nature around prepayment speeds in this environment, are logically lagging behind moves in other interest rate markets… rates on loans are 6-8bps behind comparable treasuries.
In terms of 2016 rate hikes, many assume that they’re off the table now. We’ve seen mortgages retreat a little throughout the morning and it will be interesting to see what happens Monday after investors have had a weekend to let this sink in. The Brexit and its longer term effects are something we’ll be talking about for a while, so if you have questions, shoot them our way and we’ll try to answer (or find an answer) …. Stay tuned for what promises to be a really interesting summer!!
If you need help qualifying a buyer this weekend, or have a buyer who needs a second opinion of a current loan, don’t hesitate to contact us!”
Brexit: It is a word that has become used as a shorthand way of saying the UK leaving the EU – merging the words Britain and exit to get Brexit.
Thanks Julie Bell.