Mortgage rates usually move in tandem with bond yields.
Which is why following the U.K.’s decision to exit the EU, bond yields tumbled as investors sought a safe haven, while U.S. mortgage rates also slid to near all-time lows. According to mortgage giant Freddie Mac on Thursday, the 30-year-fixed-rate mortgage averaged about 3.41% this week—down from 3.48% a week ago.
But although bond yields have been tumbling since the U.K. decided to exit the EU, it doesn’t seem as if mortgage rates are falling in step, the Wall Street Journal reported.
“Mortgage rates right now should be at least 3.25%, if not lower,” said Guy Cecala, publisher of trade publication Inside Mortgage Finance to the Journal while referencing the 30-year fixed-rate mortgage.
That comes below even the lowest rate ever recorded— 3.31% for the 30-year-fixed-income mortgage in November 2012.
In early 2012, when banks were juggling lower bond yields alongside a mortgage-refinancing wave, they held their ground against lowering mortgage rates in a bid to keep that side of revenue up, the Journal reported.