Freddie, which released its monthly housing market outlook Tuesday, noted that rates for 30-year fixed-rate mortgages had already fallen to 3.41% – “just slightly above the all-time record low” – and predicted a boost in housing activity as homeowners took advantage of current lows.
“With the U.K.'s decision to exit from the European Union, global risks increased substantially, leading us to revise our views for the remainder of 2016 and all of 2017,” said Sean Becketti, Freddie Mac chief economist. “Nonetheless, the turbulence abroad should continue to create demand for U.S. Treasuries and keep mortgage rates near historic lows; thereby, allowing home sales to have their best year in a decade, along with a boost in refinance activity.”
The Brexit vote has caused Freddie to revise its 30-year fixed-rate mortgage forecast down by 30 basis points for 2016 and 50 basis points for 2017, to 3.6% and 4.0%, respectively. Freddie also projected that the low rates will cause the refinance share of originations to rise to 49% for 2016 – a full eight percentage points above last month’s forecast. That translates to about $100 billion more in originations.
The house price appreciation forecast, meanwhile, remains at 5% for 2016 and 4% for 2017.
Britain’s vote to exit the European Union, along with slowing growth in China, should give a big boost to home sales and refinance activity, according to Freddie Mac projections.