Brexit comments from a US lender

Finance, Real Estate Industry, Relocation & Buyers

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My trusted loan officers are a tremendous resource for my business.  Here is an email I received today from one of the best out there. 

“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.