News

Events occurring a continent and an ocean away shouldn’t affect your ability to buy new homes in Yorba Linda, CA or anywhere else. But Brexit proves so extraordinary that it yields consequences not only for the players directly involved but also for the USA and the world.

What is Brexit?

You’ve probably heard enough about Brexit on the news to bring you some basic knowledge about it. But to recap, the new word stands for “British exit,” which is what the United Kingdom voted to do from the European union through a recent referendum. The British people see the Leave vote as regaining their independence and freedom from the rules and regulations imposed on them by foreigners.

The rest of the world, including the European Union, regards the exit as setting up unnecessary barriers to free trade, unlimited movement, and unrestricted business between Europe and the UK. Countries, such as the USA, that had negotiated careful agreements with the European Union now have to renegotiate those agreements with the UK as an independent entity. The resulting uncertainty about what happens economically with the UK, the European Union, and the world has interesting results for the US home buyer.

Interest Rates

US interest rates, and their dependent mortgage rates, have been slowly going up as a way to stem rising inflation. However, since Brexit, interest rates have not only stopped their rise but have also gone down. How long this downward movement will continue is anyone’s guess since once economic terms between UK and the rest of the world have been renegotiated, rates should continue their increases again.

Greg McBride, a chief financial analyst at Bankrate, thinks that rates could fall even more during the coming weeks. However, he advises that you don’t wait for that possibility because economic uncertainty trends toward surety as time passes. You need to lock in your rate as soon as you can because this trend may reverse itself at any time.

Home Prices

Home prices tend to dip on any unexpected financial news, which Brexit certainly is. Investors adopt a wait-and-see attitude and are unlikely to spend money because they don’t know whether newly bought assets are going to increase or decrease in value. With less money going to home purchases, housing prices go down to attract buyers.

This decrease will not affect prices set by Brandywine Homes, since those amounts were determined long ago based on several factors, such as supply and demand, housing recovery, and market conditions. However, it may affect the price you get if you plan on selling your home now. Keep a close eye on the price of properties that sell during the next few weeks. If you notice a downward trend, put off selling your home until the previous trend of increasing home prices resumes.

Investments

Stock market indices as well as the price of several stocks took a dip when Brexit became a certainty. Investors don’t like uncertainty when it comes to money, so they sell assets to accumulate cash for buying later and don’t buy investments now, both of which reduces investment prices. If you were planning on selling your stocks or other assets to finance your home purchase, you may want to wait. Those prices will rebound as the European economic situation solidifies. If you do have money you want to invest, now is an excellent time to put it into stocks. Prices have never been lower on your favorites and as long as the fundamentals on those companies are good, you stand to make good gains when the markets recover.

If you want more information on purchasing a home, or if you want to take a look at our homes in person, please contact us.