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Mortgage options post Brexit

With many questions being raised around Britain voting to leave the EU we have put together this blog which covers some general information to help answer any burning questions.

However it’s always best to speak to our advisers for more detailed information as not everybody’s circumstances are the same.

Brexit could benefit first-time buyers, some experts have predicted that house prices will drop, and with mortgage rates already low they could get even lower.
Those planning to put their property on the market might want to wait until things have settled, so this could stop any potential price drops – it’s all about supply and demand.

If you’re selling your home, uncertainty in the economy could make buyers nervous, which may make it hard to sell your property. Summer is often a quiet period for the housing market and things tend to pick up in September and October.

If you’re worried about house prices falling over the next few months, it may be worth acting now.  However, if others decide to hold off selling their own properties, this could mean less competition in the market and more demand for your home.

The Bank of England base rate and mortgage interest rates are already at historic lows, but on 30 June Mark Carney, the governor of the Bank of England, hinted that the base rate could be lowered even further this summer. A further drop in the base rate could mean that lenders lower their rates, but we cannot be sure that mortgages will get cheaper – nervousness from the banks could prevent them dropping their rates. It depends on your appetite to risk, you may decide you would prefer to secure a rate now and know what your repayments will be or you may prefer to wait and see if rates fall.

People are still buying and remortgaging, while the uncertainty around Brexit means it’s not exactly ‘business as usual’, indications so far suggest people are continuing to apply for mortgages and buy houses.

If you’re remortgaging fixing your mortgage rate might make sense if you want to be able to budget around your mortgage payment each month. Of course, there is the possibility that interest rates could fall over the next few months, meaning a tracker rate could make sense if you are willing to take the risk and can afford your mortgage should rates go up.

Before committing to a 2-year fixed rate, it’s worth thinking about the timing of when we could leave the EU. The rules mean that the UK will give two years’ notice from the point at which we formally notify the other member states of our intention to leave (known as triggering Article 50). This may lead to a period of uncertainty for the markets, meaning it could be a difficult time to remortgage due to nervousness from lenders. The decisions on when Article 50 is triggered will depend on the plans of the new prime minister – nothing is definite at the minute.

If you want to guard against potential interest rate rises over the next few years, it may be better to go for a longer fixed rate. That said, fixed-rate mortgage products are not suitable for everyone. What you gain in stability, often you can lose in flexibility – for example, fixed rates often come with restrictions on making overpayments and often come with early repayment charges potentially restricting your ability to move.

Speak to our helpful advisers to discuss more on whether a fixed rate mortgage is right for your circumstances, or for any other queries you have around how Brexit may affect your mortgage.


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