7/14/2016

Brexit May Hurt and Help the Economy

Brexit -- the exit of Britain from the European Union via the U.K. June 23rd vote -- brought a sharp reaction in global markets. The drop in the Euro and the British pound, to the U.S. dollar rate, is good news for U.S. travelers going there. But Britons will now need to pay more for U.S. exports, and it may mean fewer goods sold by American to the U.K. in the future. But the U.K. only accounted for less than 4 percent of American exports in 2015, so the effect on the American economy is not likely to be direct.

There are other impacts though, as Brexit further delays any increase in Fed rate hikes, the rate hike that has been so long predicted to be coming. While this can be seen as great news by buyers and homeowners wanting to refinance, it also decelerates U.S. economic growth. On the other hand, Treasury yields on the 10-year note went down, followed by mortgage rates. Mortgage rates may well stay at 2012 levels.


--from California Association of Realtors Market Snapshot

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