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For American consumers, there's an economic silver lining to the British decision to exit the European Union - lower mortgage rates. Since the Brexit vote, interest rates on 30-year fixed mortgages have fallen to their lowest levels in more than three years. It is spurring a boom in mortgage applications that experts expect will continue. NPR's Yuki Noguchi explains.
YUKI NOGUCHI, BYLINE: Spencer Cullen is a loan originator for CRM Lending in Tysons Corner, Va. Since the Brexit vote, he's seen his business spike 60 to 70 percent.
SPENCER CULLEN: As soon as I saw that the U.K. was voting to leave the European Union, I knew that the pound would plummet. All world money tends to flow into safer investments.
NOGUCHI: Safer investments that include U.S. Treasury bonds, which, when they are in high demand, yield less in interest. Treasury yields are hitting record lows. And because mortgage rates are tied to those rates, especially the 10-year note, Cullen knew his business would boom.
CULLEN: My immediate thought was that it was going to be a 48-hour phenomenon.
NOGUCHI: But it wasn't. The Federal Reserve last week released minutes from its June meeting that underscore the central bank's caution in advance of the Brexit vote. Even though the June U.S. jobs report came out strong last week, now that the U.K. has voted to leave the EU, most market observers think the Fed will hold off on raising interest rates for the rest of the year. Michael Fratantoni is chief economist for the Mortgage Bankers Association, which reported mortgage applications shot up more than 31 percent since the vote, mostly because of consumer interest in refinancing.
MICHAEL FRATANTONI: Refinance activity had been falling until we've seen this most recent drop in rates.
NOGUCHI: Fratantoni notes the new lower rates are fanning the flames of demand for housing, as well. An even stronger demand it means many homeowners who suffered through the housing crisis can finally sell at a profit.
FRATANTONI: We've seen some strong home price growth the past couple of years, so many of those people are now in a better position to be able to sell and potentially move up. So, yeah, I wouldn't be surprised if the pace of home sales picks up.
NOGUCHI: And that could start a virtuous cycle in the housing market that could extend well beyond the aftermath of Brexit.
FRATANTONI: It is going to be a rush of activity. So if you see a mortgage banker, they're probably going to look pretty tired the next couple of weeks.
NOGUCHI: Yuki Noguchi, NPR News, Washington.
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