The average U.S. home may be roughly 5,000 miles from central London, but the recent Brexit vote is having a dramatic effect on mortgages from Maine to California and the banks and investors that back them. The average contract interest rate on the popular 30-year fixed home loan is approaching its record low, and that has created yet another refinance boom.
Even though interest rates have been low for several years, millions of homeowners have recently gained considerable home equity, thanks to fast-rising home prices.
They are now not only eligible for refinances but may want to tap some of that new-found equity. The mortgage market could have a refinance boom rivaling the one seen from 2008 to 2014, when about 25 million borrowers refinanced their mortgages, according to a new report from the Urban Institute authored by Jim Parrott and Alanna McCargo. That will mean short-term pain for some of the nation's largest mortgage servicers as well as investors in mortgage-backed securities, or MBS.