Almost a year ago, the UK electorate took to the polls to decide whether we should stay in or exit the EU. A mandate was duly delivered.
Fast forward 11 months and on 8th June 2017, we’ll all return to the ballot boxes to give whoever is elected a mandate to govern for the next 5 years. This period will include negotiations to confirm our formal withdrawal from the EU. The latter negotiations will be long, complicated and must be beneficial for all sides; the remaining 27 states in the EU and the UK. It’s a huge undertaking and so much relies on us getting “a deal” that secures our future to ensure we, as a country, remain competitive. I’m glad I’m not involved!
Since we voted to leave the EU, the mortgage market has appeared largely unmoved by the prospect of Brexit, as lenders’ interest rates continued to fall. In fact, we have seen the start of a mortgage “war” with lenders such as HSBC and Yorkshire Bank offering mouth-watering products to tempt property buyers. This, therefore, underlines a real appetite for banks to lend. The rates are very competitive and the products available suit buyers and lenders alike.
For many years, interest rates have been at a record low. Such low interest rates represent good news for mortgage borrowers, particularly those on mortgages which track the Bank of England’s base rate.
Yet, Brexit offers a real glimmer that bank rates could rise. In the immediate aftermath of the decision to exit the EU, confidence from lender and consumers dropped, the Pound Sterling hit a 31 year low and inflation rose. If a rise in bank rates did come to fruition, savers would cheer, those with a mortgage that tracked bank base rate wouldn’t. To that end, headlines are now being produced suggesting the BOE is taking a keen interest and is ready to act, if necessary.
So, should I fix my mortgage rate now?
As we know, Article 50 has been invoked and the formal process has started for the UK to leave the EU. Whilst everyone is keeping a close eye on the General Election and the resulting negotiations with the EU, there’s no certainty that home owners and the mortgage market will be negatively impacted. Through the recent uncertainty, the mortgage market has grown, house prices continue to rise and pressure is on house builders to keep up with building homes for us all. We understand there is nervousness about a potential rise in interest rates, and what exactly the fallout from our withdrawal from the EU will be, but this will only become clearer in the months and years ahead. The BOE will want to keep things steady for as long as possible. There won’t be any knee jerk reaction from Mark Carney and fellow decision makers.
Resilience is called for from all who have a vested interest in mortgages. For now, we can only hope that the property and mortgage markets continue to show the same resilience that they have shown since June.
All personal circumstances are individual. At Hayes Finance, we would like to invite you to discuss your needs and we can advise on the best route forward for you. We have plenty of data about how well the property and mortgage market has held up and we’ll continue to hope it does. What happens in the future? We’ll have to wait and see!
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