econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 08 August 2016

Handicapping Brexit - Winners And Losers

from CoreLogic

The world has now had a couple of weeks to get over the shock of Brexit or the decision of Britain to exit the European Union. As week-three begins, global equity, debt and currency markets have stabilized. What does Brexit mean for the US mortgage and real estate markets for the next few months?

Here's a quick rundown on potential winners and losers in the mortgage and real estate industries.

Winners

The US Mortgage industry. That's because the flight to safety has depressed yields and should give refinances a modest boost and provide further support to the purchase market. While the consensus is that mortgage rates will substantially fall, it's important to keep in mind the components that determine rates. Since Brexit occurred, the risk free benchmarks such as the 10-year treasury has declined by about 40 basis points. However, credit spreads rose which partly offset the drop in treasuries. That means wholesale mortgage rates fell by 29 basis points and have stabilized (Figure 1). If future turbulence occurs and drops treasuries further, keep in mind the pass through to mortgage rates will be more muted.

First time buyers and Consumers with ARM loans. The likelihood that the Federal Reserve will raise rates has been further delayed. So first time buyers can count on continued low mortgage rates to help with affordability issues. Similarly, re-setting adjustable rate loans will have less of a rate shock, and in some cases may even go down. In addition to the downward pressure on 30-year rates from market events, there is a push to drop both the FHA mortgage insurance premium and the GSE's loan-level price adjustments, which will increase affordability.

Losers

High-end sellers, developers and realtors. The US equity markets have plateaued over the last 18 months and volatility has increased. This is an important development for the high end because as we have seen earlier (link to blog) there is a strong correlation between stock market indices and high-end ($1 million-plus) sales.

The private label securities market. Issuers and securitizers need more yield to make these deals work, and re-start the non-agency RMBS market. Continued low interest rates will push these deals even farther into the future.

Source

http://www.corelogic.com/blog/authors/sam-khater/2016/07/handicapping-brexit.aspx


1 Read Russell McIntyre's Brexit blog here.

© 2016 CoreLogic, Inc. All rights reserved.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors








search_box
Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.







Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved