Rates for 30-year mortgages dropped to the lowest level in more than three years as U.K. voters' decision to leave the European Union drove investors to the safety of American government bonds that guide home loans.
The average rate for a 30-year fixed mortgage was 3.48%, down from 3.56% last week and the lowest since early May 2013, Freddie Mac said in a statement Thursday. The average 15-year rate slipped to 2.78% from 2.83%.
The good news for both buyers and homeowners looking to refinance is that the Federal Reserve isn't likely to raise interest rates any time soon. Brexit has only heightened concerns about the global economy that have been pushing down borrowing costs since the start of the year.
"The odds for lower rates, for a longer period of time, are very good," Keith Gumbinger, vice president of mortgage-data company HSH.com, said before the Freddie Mac announcement. "If rates remain down at this level, you will see some additional incremental demand for housing."
As the busy spring selling season wound down, contracts to purchase previously owned homes fell 3.7% in May, the most in six years, the National Association of Realtors reported Wednesday. Low inventory and soaring prices are holding back sales, said Lawrence Yun, the group's chief economist.
The average 30-year rate has been below 4% since the start of the year. It reached a record low of 3.31% in November 2012.
