Last week's British vote to exit the European Union may have beneficial effects on our real estate market because of the effect on mortgage interest rates. Various blogs from the National Association of Realtors, Forbes, the Wall Street Journal, to name just a few, are reporting some optimistic news.
The Wall Street Journal on June 28 reported, "Several lenders posted rates for 30-year, fixed rate mortgages of about 3.5 percent on Monday. The main reason: Investors have flocked to the safety of U.S. Treasuries, pushing interest rates lower as riskier assets such as stocks tumbled. Mortgage rates tend to move up and down with 10-year Treasury rates, though the relationship isn't perfect."
This national effect of lowered interest rates helps our housing market by keeping homes more affordable with lower mortgage interest rates, thus lower monthly payments, which is good news for homebuyers as long as prices stabilize. Several blogs go so far as to say they do not expect Fed interest rate increases to occur in 2016 and that the anticipated Fed increase in June was postponed due to the Brexit vote. The lowered interest rates have already reportedly increased refinancing applications, and lenders are reporting increases of 10 to 40 percent in refinancing applications. CoreLogic statistics show that 40 percent of homeowners have loans with a rate of 4.5 percent or higher and that refinancing at 3.5 percent would translate to average savings of $90 per month.
The other good news for U.S. real estate is that the plunges in 401Ks and stocks make people look to safer investments such as real estate. This is expected to increase demand for high-priced real estate in high-demand markets such as San Francisco, New York, and Los Angeles, which may not be good news for buyers of affordable housing, as this increase in demand would likely push up prices in those areas. The good news locally is we are immune from that, and if people have more money in their pockets due to lower monthly housing payments, this translates into more spending, which stimulates our local economy. The other hope is that lower monthly payments will allow more first time homebuyers to enter the market and ease the rental market.
724 SE Douglas St., Bend, OR 97702
3 beds, 1 bath, 1,036 square feet,
.16 acre lot | Built in 1978
Listed by John L Scott Central Oregon
61563 SW Orion Dr., Bend, OR 97702
3 beds, 2 baths, 1,679 square feet,
.47 acre lot | Built in 1978
Listed by Coldwell Banker Morris Real Estate
2856 NW McDermott Pl., Bend, OR 97703
4 beds, 4.5 baths, 3,956 square feet, .41 acre lot | Built in 2009
Listed by John L Scott Bend
Photos and listing info from Central Oregon Multiple Listing Service