STATEN ISLAND, N.Y. (July 1, 2016) – Great Britain’s recent vote to exit the European Union could affect the Staten Island housing market in a good way.
“It looks like interest rates will remain low for quite some time because of Brexit,” said Sandy Krueger, CEO of the Staten Island Board of Realtors. “Low rates translate into lower mortgages and increased affordability, making it easier for first-time homebuyers to enter the market.”
Economists explain that a nationwide trend of financial market instability should keep mortgage rates down, particularly likely if the Fed decides not to raise short term rates.
“The Fed will very likely be on hold for some time as it observes the impact on U.S. and global financial markets and economic activity,” said Doug Duncan, chief economist of Fannie Mae.
“As the U.S. economic climate reacts to Brexit, it could also set the stage for increased interest in the Island’s real estate market, which currently is in step with the national trend of strong demand,” Krueger said.
As some foreign investors shy away from Britain in search of less volatility, “Demand for U.S. real estate could rise,” said Lawrence Yun, chief economist of the National Association of Realtors (NAR).
According to NAR, Brexit has created a potential increase in sales from foreign buyers in places like New York and South Florida. In addition, foreign companies would be more inclined to do business with the United States.
“Right now, the demand for homeownership on Staten Island is intense, and the fallout from Brexit could make it even stronger,” Krueger said.
Mortgage rates fell to a fresh 3-year low following the Brexit vote, with the benchmark 30-year fixed mortgage rate sinking to 3.61 percent, according to Bankrate.com‘s weekly national survey release June 30. The 30-year fixed mortgage has an average of 0.24 discount and origination points.
Bankrate.com also reported that the larger jumbo 30-year fixed didn’t fall as far, to 3.67 percent, and is higher than the average conforming rate for just the fourth time in the past year. The average 15-year fixed mortgage rate dropped to a 3-year low as well, 2.89 percent. Adjustable mortgage rates were down more modestly but enough to reach 3-year lows as well, with the 5-year ARM retreating to 3.01 percent and the 7-year ARM settling at 3.22 percent.
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