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What Brexit Means for Mortgages and Property Prices

For nearly three years now, Brexit has been at the top of the British public’s mind. The government has been in talks trying to reach a satisfactory deal for some time now and has experienced one delay after another. The effects of Brexit will be far-reaching, impacting everything from personal finances to the broader economy. But when a deal is finally struck, what will it mean for mortgages and property prices?


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.


Economic Impact

The future of the economy and whether leaving the EU would create or destroy opportunities was at the heart of the initial referendum debate in 2016. Unfortunately, there’s no magic crystal ball that tells us exactly what the future holds. And that’s what is at the centre of discussions currently.

Like it or not, the market is not responding well to the uncertainty that Brexit is bringing, which has a domino effect on a number of things.

Among the financial indicators affected by Brexit are interest rates, foreign exchange rates, and economic growth which in turn impact job security, house prices, and mortgage and savings rates, just to name a few.

Experts predict a deal that has Britain and Europe retaining close ties will be more immediately favourable, despite how uncertain the outcome will be in the long-term.



Property Prices

Back in November, the Bank of England released a report predicting the worst-case scenario that a no deal Brexit could lead to. In short, a shrinking economy and the possibility of house prices dropping nearly 30%. To top it all off, the unemployment rate could double and inflation could rise to 6.5%.

Of course, this forecast is just the worst-case scenario and the actual effect may come nowhere close to those numbers. And house prices falling isn’t exactly bad news for everyone – it could help many who may not have been able to afford a home get on the property ladder and if you already own a home (and have locked in a fixed rate mortgage) you won’t feel any effect of rate changes.

Those who will be affected, however, would be people who are in the market for a new home (and not necessarily a bigger home) or homeowners looking to release equity in their home or sell their current home on and cash up.


Could rates rise?

The Bank of England base rate hikes have been a popular discussion after years of remaining stable. Now sitting at 0.75%, the BoE responds to the state of the economy. Should Brexit cause an economic upset, expect the BoE to drop rates accordingly in an effort to revitalise the economy. With rates lowered, people will spend more and save less.

The flip side of this is that if the pound drops, importing will become more expensive and will lead to a rise in inflation. Normally to combat inflation, rates increase in an effort to curb demand and lower prices. An economic boom as a result of Brexit will, of course, lead to the opposite outcomes.

While the base rate has risen, it is still remarkably low, so if you are concerned about potential rate changes, go ahead and lock in a fixed rate mortgage deal because rates aren’t likely to go any lower, but could very well increase. Savings and personal loan rates aren’t likely to be greatly impacted as those rates usually get locked in at the beginning anyway.


Speak to the experts

This is all to say that, everything surrounding Brexit is completely still up in the air. The situation is constantly evolving and results are highly unpredictable.

If you’re looking to find peace of mind and Brexit-proof your finances as much as you can, get in touch with one of our team members today.


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