Rate Hike: Chances fall to zero after U.K. votes to leave E.U.
World stocks saw more than $2 trillion wiped off their value on Friday as Britain’s vote to leave the European Union triggered 5-10 percent falls across Europe’s biggest markets.
Such a blow to global confidence could prevent the Federal Reserve from raising interest rates as planned this year. It might even provoke a new round of emergency policy easing from all the major central banks..
Investors stampede into low risk sovereign bonds, with U.S. 10-year Treasury futures jumping over 2 points.
Policy rates remain unchanged after the Fed’s June meeting. The odds of two rate hikes in 2016 have fallen, with six members anticipating only one.
A July increase may hinge on a strong monthly jobs report. The current four-week average for jobless claims is strong, supporting a possible change.
Britain’s voters will decide whether to exit the EU on June 23. Expected volatility in the stock and bond markets could lead to the same for mortgage rates.
Existing home sales rose to a nine-year high in May. The housing market has been supported by low mortgage rates and a strong labor market.
However, despite rising for 3 straight months, existing home sales remain constrained by inventory. Strong demand continues to drive home prices higher.
Homebuyers struggling to find their dream homes because of limited inventory are buying and renovating instead. Over 25% of renovations are by new homeowners.
Student loans impact not only buyers, but also sellers. A new survey shows that 1/3 of homeowners with student debt are delaying a sale.
Don’t discount Baby Boomers just yet. 19 million 55+ homeowners plan at least one more home purchase, with 8 million expecting to move within four years.
Foreclosure and serious delinquency rates have dropped to post-crisis lows, due in part to strong appreciation in home values.
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Brought to you by
Jane E. Daley
Jeff Daley, PhD
REALTOR®, GRI, e-PRO, CLHMS
Luxury Valley Homes ® (LVH)