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More than a month has passed since Britain voted to leave the EU – the economy, along with tempers, may have settled down, but there is still a level of uncertainty as to what will happen over the next couple of years.
There are endless questions that will need to be answered, not least how the decision is going to affect both the economy of the country, and our own personal finances.
In regards to the latter, one of the most crucial questions that people want answered is how the property market and mortgages will be affected in the post-Brexit world.
A mortgage is likely to be one of the biggest financial commitments you’ll make so it’s only understandable that any uncertainty surrounding the property market may have you worried.
But it may not be all doom and gloom, Brexit could bring many benefits too.
Although there is no guarantee of what will happen in the long-term, we’ve put together some general information about how Brexit could affect your and your mortgage.
Although many young UK citizens were likely to have voted to remain, Brexit could actually provide light at the end of the tunnel for those who are desperate to get on the property ladder.
Some experts have predicted that an unstable economy along with a lack of confidence in the property market could see house prices dropping.
We have seen one of the biggest booms in house prices in recent years, particularly in London, which has priced many young buyers out of the market. Although many people will be cautious about buying during uncertain times, it could mean that a brave first-time buyer is able to grab a bargain as desperate sellers drop their prices in order to incentivise buyers.
It’s certainly a tricky time for those wanting to remortgage their properties. Over the last 12 months, many people rushed to remortgage onto low, fixed-rate deals as rumours abounded that the Bank of England would raise their base rate, marking the end of the rock-bottom mortgage rates that we have been enjoying for the past few years.
However, since the Brexit vote was announced, and the markets went into disarray, the Bank of England decided to lower the base rate to 0.25% from 0.5%, in order to stop us heading in to another recession.
For those who are yet to remortgage, a cut to interest rates will be more than welcome. For those who have switched to a long-term fix to protect themselves from any future rises may now be kicking themselves.
The future may not be so rosy for those who are looking to sell their home. An uncertain economy is bound to make buyers nervous, and although there may be many first-time buyers who are relishing the chance of cheaper properties, this is not good news for the home seller.
A huge demand for property has seen prices pushed up year on year; however post-Brexit nerves are likely to see that trend reversing. If you are worried about house prices falling dramatically then you may want to act sooner rather than later. If other buyers choose to hold off until things become more certain, then this could mean more demand for your property and less competition from others.
Since Brexit, the Monetary Policy Committee have met, where they voted to lower the base rate to 0.25% – this was done to help the UK economy recover following the Brexit vote and to help avoid a recession, of which there are many rumours this may still happen.
As homeowners and buyers may err on the side of caution and with the lower base rate announced this month, lenders may wish to generate custom and keep things buoyant by introducing some phenomenally low rates, particularly for short-term fixes. There are still some great rates to be found on long-term fixes if you are looking for more financial security in the long-term.
If you’re on a variable rate mortgage, then the rate cut will work in your favour. But if the economy begins to grow, then typically this will also push up interest rates as people are encouraged to save rather than borrow. Interest rates may be volatile for some time so it’s important to always stay on top of the situation, making sure that will be able to afford the repayments if the rates were to go up at short notice.
Whatever your situation, it’s clear that Brexit could bring both positive and negative news and as time passes, many of the questions you have regarding your mortgage will become much clearer.
It’s important not to make any judgements based on the first few days of the referendum results – mortgages are a long-term commitment so it’s important to think about the economy long-term too.
One of the biggest positives right now is that there are still some great mortgage rates to be had – to make sure you are in the best financial situation to take advantage of these, then it may be wise to speak to a mortgage adviser. They can make sure that you can find the right deal that is best for your circumstances, and help you to give you financial security for the future or allow you the flexibility to change your mortgage if dictated by the wider impacts of Brexit.
Our trained expert advisers have access to the UK’s leading lenders and using their knowledge and skills will place you with the most suitable leader and product for your needs.
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