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Mortgage Rates Recover Slightly

Mortgage rates recovered just a bit today after hitting the highest levels in more than a month yesterday.  The inspiration for much of the recent upward pressure on rates can be traced to progress in Britain's attempt to exit the European Union (aka "Brexit"). 

It's not that Brexit is bad for interest rates.  In fact, it's definitely been a positive influence off and on for nearly 4 years now.  Rather, it's the manner in which Brexit is accomplished that matters to global bond markets, and thus, to interest rates.  To be clear, European markets have seen the biggest effects, but there is some spillover in the US. 

The most important consideration at present is whether or not the UK will leave the EU with or without a deal.  A so-called "no deal" Brexit would be the better option for fans of low interest rates as the absence of the deal creates broader economic uncertainty.  Interest rates tend to fall in response to economic uncertainty.  

The likelihood of a "no deal" Brexit is slim, however.  It wasn't necessarily as slim a few weeks ago, and that's precisely why rates have moved up during that time.  If a deal looks like it's materializing, it would put upward pressure on rates, all other things being equal.  Of course all other things aren't equal. Brexit-related events have simply been in focus over the past 2 weeks.

This Daily Mortgage Rate Update is provided in partnership with Mortgage News Daily.