If you are waiting to purchase a home or lock your mortgage interest rate, it may benefit you to wait a few weeks and see what happens on the other side of the pond.

Friday, March 29, 2019 is the current deadline for the United Kingdom to formally withdraw from the European Union, also known as Brexit. The UK referendum on June 23, 2016 affirmed the move to decouple from Brussels, but it has taken over two and a half years to wind down the details. The time has been needed to negotiate the economic elements of separation.

The final parting, scheduled for later this month, could send shockwaves through global financial markets. At issue are the handling of complexities like future trade between Northern Ireland (United Kingdom) and the Republic of Ireland (EU), the dissolution of ferry contracts between Britain and the European mainland, and how to handle security checks on the Channel Tunnel that connects Britain and the continent. Much remains unresolved.

Earlier this week, Prime Minister Theresa May’s second proposal on withdrawal terms was rejected soundly by the UK Parliament. She has now agreed to seek an extension from the European Union on the terms of withdrawal. May had earlier indicated that March 29th would be a hard date for an exit, with or without withdrawal terms. Many believe that it would be in the best interest of the EU to approve an extension request.

Whether the parting comes at the end of this month or early in 2020, global financial markets will be on unsettled ground awaiting the result.

That has implications for mortgage interest rates in the United States.

U.S. mortgage interest rates track loosely with the 10 year U.S. Treasury bond market. If global investors fear financial upheaval in Britain (the fifth largest economy in the world), many will pursue security in U.S. Treasuries. If investors seek shelter en masse, this will put downward pressure on rates offered by the sellers of those securities. More buyers for the same product means that the seller’s offering does not need to be as competitive. Lower mortgage rates are the likely result.

That is positive news for U.S. homebuyers and homeowners wanting to refinance.

Mortgage interest rates have been on a downhill run in the United States since mid-December. This is after rates trended upward for the first half of 2018. The prospect of a bumpy Brexit may keep downward pressure on rates for weeks or months to come.

Stay tuned, 2019 might be a stellar year to lock in low mortgage rates.


Uncertainty of any sort results in volatility, and Brexit will be no exception. – Raghuram Rajan, Indian economist