Last week we spoke of the Federal Reserve Board quoting “headwinds” faced by our economy, something that Janet Yellen reiterated in her testimony to Congress this week. Now we get to see a prime example of these headwinds in action with regard to the vote on Britain’s exit from the European Union. The uncertainly leading up to this vote was a factor in unsettling the markets, but that is nothing like the uncertainty we now have as the vote to leave is contemplated by the markets.
It would not be unreasonable to expect the volatility to subside when the world realizes that it will take at least two years for Brexit to happen and we don’t know what form that exit will take. There are so many variables — including how some parts of the United Kingdom who supported Bremain will react. We have bounced back from wars, natural disasters and terrorist tragedies again and again. We are certain that these new headwinds will not stop our progress either. However, regardless of our resiliency, our leaders must continue to be vigilant in keeping these factors in mind, and the Fed will continue to do just that.
Certainly the stock market has also been very resilient in the past. From the depths of the recession, it has bounced back magnificently over the better part of the last decade. However, since the end of 2014, the level of 18,000 for the Dow Jones Industrial Average has been a difficult level for the market to maintain. Every foray above that level seems to be accompanied by a pull back. It is interesting that we reached the 18,000 level again the day of the Brexit vote. The good news in all of this? At least temporarily, we will have record low rates again and for those who react quickly, refinancing or purchasing a home will be a great move.
The Weekly Market Update
Rates remained near their three-year low in the past week, but these numbers were issued before the Brexit vote was announced. Freddie Mac announced that, for the week ending June 23, 30-year fixed rates rose slightly to 3.56% from 3.54% the week before. The average for 15-year loans also increased slightly to 2.83% and the average for five-year adjustables was unchanged at 2.74%. A year ago, 30-year fixed rates were at 4.02%, almost one-half of one percent higher than today's levels.
Attributed to Sean Becketti, chief economist, Freddie Mac --"Rates on home loans have been slow to adjust to the 10-year Treasury yield, which has increased 12 basis points since last week. This week's survey shows the 30-year fixed rate inching up to 3.56 percent, only 2 basis points above last week's average. The low rates continue to be good news for the housing market, as existing home sales rose 1.8 percent to a 5.53 million seasonally adjusted annual rate in the month of May -- the highest level since February 2007."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.