Britain shocked many by exiting from the European Union, that shocked investors and had many investors flocking to US mortgage bonds. That in turn dropped mortgage rates this week! So now what happens?
When there is turmoil in the market, it is very common for investors to move to mortgage bonds. They are more secure and when this happens, typically rates drop. That is what has happened since "Brexit" occurred.
Currently most mortgage rates have been in the 3's and 4's – that has been common for some time. We keep expecting them to increase, but it seems like there is always something stopping them. Now the question is, what will happen – will we see rates in the 2's??? Some of the short term mortgages such as 10 yr, 15 yr and some adjustable rates are already in the high 2% range depending on your situation. Will the 30 yr mortgage get there? No one knows for sure, but some are speculating that it may happen.
There is talk that other countries may leave the European Union, that could cause more turmoil and more movement to the US mortgage bonds. Banks could still drop rates and sell those bonds at lower rates due to the market turmoil, only because a low rate of return is still better than a negative return.
If rates do drop into the 2% range, it will be government loans first, followed by conventional loans. Typically FHA and VA loans are always lower than conventional loans. Right now, FHA rates are in the very low 3% range for many buyers (depending on credit, etc). How long will this last? No one knows for sure. the only thing we do know is that mortgage rates are great right now!