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How Low Can Mortgage Rates Go?

By Steve Matthews

Friday, July 1st, 2016

Mortgage rates moved lower this week following last week’s Brexit headlines (the U.K.’s vote to leave the European Union).  Indeed it’s hard to turn on the TV, computer, or radio without hearing about Brexit.  Global financial markets are still in the throes of the “initial reaction” time frame.  That means selling stocks and buying bonds.  When investors buy bonds, rates fall— albeit at a bit slower pace for mortgage rates compared to other popular rate benchmarks (like 10yr Treasury yields).

There’s no telling how long this “initial reaction” period will continue and what the longer term effects will be, but for now, the short term effects have been strongly positive for rates.  The most prevalent conventional 30yr fixed quote is still 3.5% on top tier scenarios.  With just a bit more improvement, the average lender would be at 3.375% for the first time since early 2013.  This is also the lowest stably-maintained rate we’ve ever recorded (there were scattered instances of 3.25% back in 2012).