Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.
Well, it was all #Brexit all the time, all weekend long.
Just in case you’ve been living under a rock, voters in the United Kingdom shocked the world late last week when they choose to leave the European Union behind and move forward as a sovereign and separate entity.
The immediate economic impact of the “Brexit” decision was as swift as it was serious.
Greg Ip, writing for the Wall Street Journal, recapped the worldwide reaction to the U.K.’s historic decision.
From the Wall Street Journal:
The initial drops in the pound and global stock markets were severe, but not cataclysmic. Worries of a financial panic similar to the bankruptcy of Lehman Brothers or default of Greece look unfounded for now. The Bank of England and its foreign counterparts signaled a readiness to lend banks what they need to cover any temporary cash outflow. Yields on British government bonds went down, not up, evidence of strong buying demand and no sudden flight of foreign capital.
As many economists and observers note, it’s far too soon to know the full and complete impact of the Brexit, but the general consensus is that Brexit is going to be good for U.S. mortgage interest rates, at least from a consumer perspective.
As HousingWire’s own Kelsey Ramírez wrote on Friday, experts at both Fannie Mae and Zillow believe that interest rates will fall even lower than the historic lows of late, with interest rates hovering around 3.5% for much of 2016.
“We expect mortgage rates to reach historic lows in the wake of the Brexit vote, as investors flock to relatively safer investments in U.S. mortgage-backed securities,” said Erin Lantz, Zillow vice president of mortgages.
“The vote may also delay future federal funds rate hikes as the Federal Reserve assesses the degree of political and economic uncertainty that the vote introduced to global markets,” Lantz said. “Consumers worried about buying or refinancing before rates rise will now have more time to take advantage of this historically low rate environment.”
As Lantz alluded to, many in the mortgage business hoped to see the Fed increase the Federal Funds Rate at some point in 2016, leading to an increase in mortgage interest rates, but that looks like even less of a sure thing than it did just one week ago.
And even then, hope was dwindling that the Fed was actually going to do anything.
But now, many believe the Fed will wait even longer to increase its benchmark lending rate, perhaps even until 2017.
That’s exactly what Bill Gross, the world-renowned fixed income investor, thinks.
Gross, who co-founded PIMCO and shockingly left it behind in 2014, now runs Janus Capital Group.
Gross joined Bloomberg TV on Friday to discuss the impact of the Brexit, and Gross said that he thinks the Fed will delay a rate increase for quite a while.
From Bloomberg:
The Brexit vote probably will end the chances for a Federal Reserve rate hike this year and perhaps through 2017, according to Bill Gross, the bond manager who has been warning that low rates are hurting global growth.
“Not at the moment in the face of this,” Gross said in an interview with Erik Schatzker on Bloomberg TV Friday.
As Lantz said, Gross noted that it’s likely that many investors will see U.S. mortgage bonds as a “safe haven,” which will help to keep mortgage rates low for the foreseeable future.
In fact, some lenders are already trying to take advantage of the thought thatmortgage rates are heading even lower and the turmoil surrounding the Brexit.
On Friday, Quicken Loans sent emails to customers and prospective customers with the subject line “The Brexit Pushes Rates to Three-Year Lows,” and the headline “What the Brexit Means for You.”
The email tells consumers that now is the time to buy or refinance.
“Britain's decision to leave the European Union has caused interest rates to drop to three-year lows,” Quicken’s email states. “This is the opportunity you've been waiting for to refinance or buy a new home. There is no better time to move forward with a new mortgage than right now.”
Quicken, coincidentally, began offering 1% down mortgages to certain customers. And if you’ll excuse the shameless self-promotion, click here for HousingWire-exclusive details on that program, revealed nationwide for the first time on Friday.
In other decidedly non-Brexit news, Monday is D-day for lenders, as they will now be required to use the new web-based Electronic Appraisal Delivery portal for Federal Housing Administration loans.
For more details on the EAD portal, which is mandatory as of Monday, click here.
If this election season has taught us anything (and it’s taught us many things already), there is still a significant amount of disdain towards “Wall Street” over the financial crisis and the time after it.
One of the chief tenets of the presidential campaign of Sen. Bernie Sanders, I-VT, was his vitriolic attacks on Wall Street.
In one campaign ad, Sanders targeted Wall Street, with the ad accusing Wall Street of funneling millions of dollars to political candidates in exchange for influence.
“Our economy works for Wall Street because it’s rigged by Wall Street,” Sanders' ad stated.
“How does Wall Street get away with it?” Sanders’ ad asked. “Millions in campaign contributions and speaking fees.”
Well, one of Wall Street’s top cops appears to agree with Sanders, at least in some way.
In an interview over the weekend with ABC News, Preet Bharara, the U.S. Attorney for the Southern District of New York, said that he understands why so many people have so much anger for Wall Street.
From ABC News:
This election year has exposed widespread voter anger directed at Wall Street, and U.S. Attorney for the Southern District of New York Preet Bharara agrees that "to an extent, people are right about the system being rigged."
"I think people have a right…given the track record of this office and other offices of exposing fraud, to be worried about that," Bharara told ABC News' George Stephanopoulos.
And finally, the Federal Insurance Deposit Corp. did not close any banks the week of June 24.
