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Mortgage rates have taken a tumble in the wake of the Brexit vote, offering homeowners their best opportunity in years to refinance.

Thirty-year mortgage rates were already at their lowest level in three years prior to Thursday's vote, according to last week's Freddie Mac rate survey, and fell along with interest rates worldwide in the immediate aftermath of the vote.

rates dropMortgage rates dropped about one-eighth of a percent on Friday, according to various indices, and continued to soften on Monday. Reports on Monday put average 30-year rates at or just below the 3.5 percent level, edging close to their all-time lows.

For a borrower refinancing their mortgage, the difference between last week's rates and Monday's would be represent a savings of about $20 a month on a $250,000 mortgage with a 30-year term.

Various indices currently report 15-year fixed mortgage rates to be around 2.75 percent, and 30-year FHA rates are averaging about 3.25 percent.


How long will it last?

The drop in rates could be short-lived, however. Rates often over-react to events that are seen as having a negative effect on national or the world economy, and buoy back up after a few days.

However, further declines are possible if economic pessimism arising from the Brexit vote worsens over the coming weeks.

Historically, it would seem rates do not have much more room to fall. The lowest rates in at least half a century were recorded in late 2012, when average 30-year rates hit 3.32 percent in the weekly Freddie Mac rate survey; other indices at that time reported averages slightly higher or lower.

Rates reported by the various mortgage indices represent averages and do not necessarily indicate what an individual borrower will be able to obtain. Individual borrowers' rates will vary according to, among other factors, borrowers' credit scores and whether or not they chose to reduce their rate by purchasing discount points.

Borrowers wishing to know the rate they might be able to obtain and their various mortgage options should obtain a rate quote based on their particular circumstances from one or more lenders.

Published on June 21, 2016