Brexit Favors American Travelers and Homebuyers

 

U.S. multinationals in the European Union (EU) and United Kingdom (UK) have a good reason to hold a grudge against Britons who voted to exit from the European Union in the June 24 referendum. The “leave EU” voters’ majority victory over those who wanted the UK to “stay” in one of the largest economies in the world fanned business uncertainties and prompted massive stock sell-offs. American investors, who have $5.4 trillion investments in the UK in 2014, according to the UK Trade and Investment, suffered share value losses. Their lingering concerns over Brexit, as the decision to exit from the EU is called, continue to hound the U.S. stock market this week. Travel to London

Mortgage Rates Fall

 

Brexit is going to cause pain to U.S. companies with sizeable sales to Europe all the way up to 2017, according to Bank of America-Merrill Lynch. Still, there is a good reason for ordinary Americans to be happy about the UK-EU divorce. Shareholders switched to low risk assets or U.S. Treasury bills in the aftermath of the exit vote lowering 30-year fixed mortgage rates to 3.61 percent last week from 3.73 percent in the week of the referendum, according to lenders monitor Bankrate. For mortgage giant Freddie Mac, the rate for a 30-year fixed mortgage fell to 3.48 percent last week from 3.56 percent the week before while 15-year fixed mortgage went down to 2.78 percent from 2.83 percent last week.

T-Bills

 

T-bills yield falls when there are more buyers of government debts and it tends to lower interest rates on housing loans. Cheaper mortgage offers homebuyers easy payment terms or lets them refinance home loans under lower interest rates.

British Pound Continues to fall

 

Brexit also lowered the value of the British currency. The day after the vote, the value of the pound sterling against the U.S. dollar fell 8 percent to $1.37. On Tuesday, the pound was worth $1.29, 12 percent lower than the U.S. currency before the UK referendum. With a stronger dollar, Americans can travel cheaper to the UK and buy more goods there. Americans are the biggest spending visitors in the UK. In 2014, a U.S. visitor spent an average £609 per visit lasting 7.7 days, according to the UK’s Office for National Statistics. Value of the Pound

Pros and Cons of Brexit

 

HSBC and UniCredit are predicting that the pound’s dollar value would be $1.20 by year-end. That currency exchange rate would even be more favorable to Americans vacationing in the UK and to U.S. importers, who could buy more British goods. American exporters, however, face the prospect of dampening orders from British importers with weakened purchasing power. The UK, the world’s fifth largest economy and the biggest export market of the U.S. after the EU, imported $56 billion worth of American goods in 2015, according to the U.S. Census.

The pros and cons of Brexit to American businessmen and consumers are balanced so far being detrimental to exporters and investors with large interests in the UK and the EU single market while beneficial to homebuyers and travelers. For the latter two, at least there is a good reason to be happy with Britons voting to leave the EU. British Pound May be Equal to The Dollar