How will Brexit affect VA loan rates?

by Ryan Smith11 Jul 2016
Britain shocked the world last month when its citizens voted to leave the European Union. The vote sent the pound tumbling and many investors rushing for the relative safety of Treasury bonds – a move that may push mortgage rates as a whole to a historic low. But what about VA loans?

VA home loans have already had the lowest average interest rate on the market for the last 24 months. in the first five months of 2016, the average rate for a 30-year VA purchase mortgage was 3.94%, compared to an average of 4.23% for a conventional loan, according to a Huffington Post report.

“Upheaval in the wake of the Brexit vote is only sending those VA loan rates lower,” wrote Veterans United Home Loans Education Director Chris Birk for HuffPo. “The question is for how long.”

Mortgage rates as a whole are already approaching record lows. Last week, the average rate for a 30-year fixed-rate mortgage was 3.41%, down from 4.04% at the same time last year, according to Freddie Mac. So should qualifying borrowers lock in their VA loans now?

“There’s really no easy way to gauge how much longer Brexit-induced volatility will continue to impact the mortgage market,” Birk wrote. One thing the experts agree on is that even if borrowers decide to wait and see, they shouldn’t wait too long.

“Mortgage rates are going to tumble,” Greg McBride, chief financial analyst for Bankrate, told CBS MoneyWatch. “They may set new record lows, but borrowers shouldn’t wait too long to lock in a rate, because the opportunity may be short-lived if the market stages a rebound.”