Brexit has played a major role in lowering mortgage rates, which is expected to boost U.S. housing activity particularly refinancing, Freddie Mac said in an outlook for the month of July.

On July 12, the government-sponsored enterprise released its monthly outlook, outlining international concerns like Brexit and China’s slowing growth and their role in driving down mortgage rates.

“With the U.K.’s decision to exit from the European Union, global risks increased substantially leading us to revise our views for the remainder of 2016 and all of 2017,” Sean Becketti, chief economist at Freddie Mac, said in an accompanying press release dated July 12.

“Nonetheless, the turbulence abroad should continue to create demand for U.S. Treasuries and keep mortgage rates near historic lows; thereby, allowing home sales to have their best year in a decade, along with a boost in refinancing activity.”

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Freddie Mac, citing such recent global pressures, has revised its forecast for the 30-year fixed rate mortgage down by 30 basis points or 3.6% for 2016 and by 50 basis points or 4.0% for 2017.

For the week ending July 7, 30-year FRMs averaged 3.41%, just 10 basis points away from the recorded all-time historic low. The Primary Mortgage Market Survey (PMMS) conducted by Freddie Mac for the week ending July 14, showed little change as the 30-year fixed-rate mortgage held steady at 3.42%.

As homeowners are likely to avail of the current low mortgage rates, Freddie Mac expects originations relating to refinancing to increase by 49% for 2016, eight percentage points from last month’s forecast. This means about $100 billion more in origination transactions, with expected total originations of $1,825 billion in 2016.

Freddie Mac also kept its house price appreciation forecast at 5.0% for 2016 and 4.0% for 2017.

Freddie Mac said mortgage rates will remain “cheap” as the Fed is likely to put on hold its targeted fed funds rate increase following Brexit.

RATES TO REMAIN LOW THIS SUMMER

Two days after its July outlook announcement, Freddie Mac released its weekly mortgage survey with rates showing slight movement for the week ending July 14th.

30-year FRM was 3.42%, up from the prior week’s 3.41%. About this time last year, the rate was 4.09%.

15-year FRM averaged 2.72%, down from the previous week’s 2.74%. Last year, the average rate for 15-year FRM was 3.25%.

5-year ARM was 2.76%, up from the earlier week’s 2.68%. The rate stood at 2.96% last year.

“This week, the 30-year fixed rate barely budged, rising just one basis point to 3.42 percent. This pattern suggests that mortgage rates are likely to remain low throughout the summer,” Mr. Becketti explained in a July 14 statement.

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REFINANCE, PURCHASE APPLICATIONS UP

For the week ended July 8, the market composite index rose to 7.2% on an adjusted basis and decreased 14% on an unadjusted basis compared to the prior week, according to data released by the Mortgage Bankers’ Association on July 13. The index is used to measure mortgage application volume. Refinance applications also increased to 11% for the week ending July 8th.

Mortgage activity’s refinance share was 64%, up from 61.6% of the week before that, according to the MBA’s Weekly Mortgage Applications Survey whose respondents include thrifts, commercial banks, and mortgage bankers.

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