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“Brexit” Leads to Lowest Mortgage Rates This Year

While the surprising vote for Britain to leave the European Union has led to more questions than answers, American homebuyers should be excited. “Brexit” has resulted in the lowest mortgage rates the U.S. has seen in over three years.

The average 30-year mortgage rate hit a low of 3.46 percent earlier this month, which is next to the lowest average rates reported in 2012. Buying power increases with lower mortgage rates, as monthly payments are lower. For those well-qualified buyers, lower mortgage rates more than offset the increase in home prices the market has seen since the beginning of 2016.

2016 has already seen low mortgage rates which, coupled with first-time buyers and retirement buyers, have been the driving force behind the strong real estate market this year. Brexit might very well add a little more urgency for those thinking about buying. Increasingly, individual investors are looking toward single-family rentals as sound investments, creating an even more competitive real estate market.

With lower mortgage rates, most lenders look more closely at credit restrictions. The tighter regulations regarding lending can limit first-time buyers, while benefitting those who can avoid financing altogether. Both first-time buyers and individual investors are looking at similar, affordable properties, creating a very aggressive single-family home market.

Brexit is already resulting in a boost for those currently involved in American real estate. While investors and first-time buyers fight for limited single-family home inventory, those sellers with the right price point in the right location will continue to reap rewards. Well-qualified buyers will be able to take advantage of incredibly low mortgage rates, as will builders and developers looking to buy land for future projects.

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