Skip to main content

Brexit Credited With New Refi Boom

Phil Hall
Aug 01, 2016
Yes, we’re still talking about Brexit’s impact on the U.S. housing market—and in this case, it appears that the decision by U.K. voters to leave the European Union is being credited with fueling a new surge of American refinance activity

Yes, we’re still talking about Brexit’s impact on the U.S. housing market—and in this case, it appears that the decision by U.K. voters to leave the European Union is being credited with fueling a new surge of American refinance activity.

According to a data analysis from Black Knight Financial Services (BKFS), the June 23 Brexit vote increased investor interest in U.S. Treasury Bonds, while driving down mortgage interest rates. Within two weeks of the vote, BKFS estimated that 1.2 million borrowers with 4.25 percent interest rates suddenly gained a new incentive to refinance their mortgages.

“The reality is that, post-‘Brexit,’ mortgage interest rates declined by about 15 basis points–not significant in the grand scheme of things,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “But for 2.8 million borrowers with current rates right at 4.25 percent, this modest decline was enough to put them 75 basis points (bps) above today’s prevailing rate, the point at which we consider a borrower to have incentive to refinance. Of these, 1.2 million also meet broad-based eligibility criteria—loan-to-value ratios of 80 percent or less, credit scores of 720 or higher and are current on their mortgage payments—bringing the total refinanceable population to 8.7 million, the highest level we’ve seen since late 2012.”

However, Graboske noted that as home values continue to appreciate, rising home prices are diluting the depth of mortgage savings.

“Purchasing a median-priced home today requires roughly 21 percent of the median household income; much less than at the height of the bubble, and below the 2000-2002 average of 26 percent,” he said. “What we need to keep an eye on is what would happen if and when interest rates begin to rise again—especially if sustained low rates continue to fuel home price appreciation as they have. Even if prices stay flat—unlikely as that is—a one percent rate increase would push affordability to 24 percent, while a two percent rate increase would put affordability well above the 2000-2002 average. The question becomes, what is a sustainable ratio in a market where Qualified Mortgage lending is the norm, and student loan and other non-mortgage-related debt is on the rise?”

Published
Aug 01, 2016
Anchor Loans Hires Andrew Jewett As SVP, Enterprise Sales

Formerly lead lending at Sundae Inc.

Industry News
Aug 02, 2021
Pretium Adds 3 Execs With Residential Credit Expertise

New Hires Will Serve As Managing Directors

Industry News
Aug 02, 2021
loanDepot And mellohome Introduce Home Services Bundle

loanDepot, Inc. and its sister company mellohome are launching a proprietary bundle of home buying and selling services.

Industry News
Jul 30, 2021
Gateway Mortgage Surpasses 165 Mortgage Centers With 10 New Additions

Gateway Mortgage reported significant growth in the company, prompting it to open 10 new locations across Colorado, Idaho, Oklahoma, Texas, Oregon, and Wyoming.

Industry News
Jul 30, 2021
FHFA Requires 30-Day Notice Prior To Eviction

Wednesday, the Federal Housing Finance Agency (FHFA) announced that tenants of multi-family properties must be given 30 days notice to vacate before the tenant is required to leave the premise.

Industry News
Jul 29, 2021
Houston-Based Stewart Acquires Title First Agency

Ohio-Based Agency Has 20 Offices And Operates in 32 States

Industry News
Jul 28, 2021