Jul. 4, 2016 – All that financial turmoil created by Brexit – the British pulling out of the European Union – continues to put downward pressure on long-term interest rates, creating more affordable opportunities for home buying and refinancing, experts say.

Benchmark 30-year fixed-rate mortgages fell on June 30 to an average of 3.48 percent from 3.56 percent a week earlier. That’s only 17 basis points above its November 2012 all-time record low of 3.31 percent, reports Freddie Mac’s Primary Mortgage Market Survey.

The mortgage rate average not only hit a low for 2016, it posted its lowest level in three years. A year ago at this time the average 30-year fixed home loan rate was 4.08 percent.

After Brits voted to exit the 28-country European Union, the British pound declined to its lowest level since 1985 and Wall Street suffered its biggest selloff in ten months. After breaking the 18,000-point level, the Dow Jones Industrial Average fell 611 points on June 24. Within a week the Dow bounced back to nearly 17,930.

However, thousands of U.S. investors fled the stock market and money poured into a safe haven – U.S. government bonds – driving bond prices higher and yields lower.

As a result, yield on 10-year U.S. Treasury notes fell to a low of 1.48 percent from 1.73 percent a week earlier. Because long-term mortgage rates tend to track the yield on 10-year Treasury notes, home loan rates also moved lower.

“In the wake of the Brexit vote, the yield on the 10-year U.S. Treasury bond plummeted 24 basis points,” noted Sean Becketti (left), Freddie Mac’s chief economist. The 30-year mortgage rate declined as well, but not by as much, falling eight basis points to 3.48 percent, he said. “This extremely low mortgage rate should support solid home sales and refinancing volume this summer,” Becketti predicted.

Baby Boomers + Millennials will make their move

So what segment of the U.S. population is going to dive into debt to take advantage of bargain-rate mortgage money?

According to new research by Marcus & Millichap, the combined group of 150 million people in the Baby Boomer and Millennial generations has $5.5 trillion in spending power.

Therefore, one would think that the aging Baby Boomers would be flocking in droves to buy downsized houses at the beach or in the mountains, and Millennials would rush into the first-time buyer condominium market in urban neighborhoods.

By the year 2020, there will be 57 million Americans age 65 or older – 16 percent of the U.S. population. However, aging Baby Boomers spend a lot of money on insurance, medications, and health care, and that spending rose by 8.3 percent over the past 12 months.

“Rather than spending money on things, Millennials are allocating income to experiences,” Marcus & Millichap said. Millennial spending on bars and restaurants rose 6.5 percent over the past year.

Both Baby Boomers and Millennials also are in love with hotel getaway weekends and vacations. In the first quarter of 2016, U.S. hotel occupancy rose to 60.7 percent, the second highest level on record.

Millennials also spend money on household formation items – furniture and home furnishings. Millennial spending in this sector rose 3.6 percent over the past year.

With all that spending at bars, restaurants, hotels, and a chunk of income going toward paying off student loan debt, Millennials likely are not accruing savings for a down payment on that first condo, experts say.

However, Marcus & Millichap noted that Millennials are spending money on rental apartments. Most of them tend to lease apartments in the suburbs where rents are affordable. “Affluent Millennials favor urban environments with live/work/play options in lifestyle communities and mixed-use developments,” Marcus & Millichap said. A better long-term option might be becoming a boomerang kid. Why not forgo the play, move back with those Baby Boomer parents, and save for that elusive condo down payment?