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By G. Steven Bray
Markets have a laser focus on whether Great Britain will vote tomorrow to leave the European Union. Right now, the vote is too close to call, and markets seem to be holding their breath. If you believe the talking heads, a vote to leave will result in economic calamity. What rubbish. I think this is a case of hype before facts. When people like George Soros start predicting a currency collapse, I tune out. It’s hard to believe people who could make money by influencing the vote.
In the longer term it probably won’t matter much what Brits decide. If they vote to leave, it will take years to disentangle Great Britain from the EU. In that time, other economic edifices will arise to address any fallout.
But, it’s the short term that will be interesting. If Brits vote to leave, expect rates to fall. If they vote to remain, expect rates to rise. I think neither effect will be lasting, but if you’re closing in the next few weeks, it behooves you to make a reasoned decision about your rate lock. You can justify locking or floating, but it’s very likely mortgage rates Fri morning will be quite different from Thurs afternoon.