What is the impact of Brexit on Mortgage?
What is the impact of Brexit on Mortgage?: On the 23rd of June 2016, the United Kingdom made the decision to leave the European Union, a move that has since been referred to as “Brexit”. For many residents, this raised a huge cause of concern, with the principal question being coined being how Brexit affects the mortgage?
The Impact of Brexit on Mortgages
Contrary to the opinion of many experts who thought Brexit would have a negative impact, while Brexit lead to a considerable rise in the prices of houses, while fixed mortgages continued to drop. This was partly caused by the decision of the Bank of England to cut back on the leading Bank Rate.
Understandably, pursuant to Brexit, investors became wary of investing in a volatile market place. This led to a drop in the number of investors being present at all times. What needs to be understood here is that the banks earn a sizeable portion of their income through loans. With less and less people asking for loans, it meant the bank chasing investors to encourage them to invest. This also led to a drop in interest rates being charged to motivate investors.
No Difference
For many individuals this did not mean any difference because they had already signed up for a fixed return and the banks refused to offer a cheaper option in accordance with the environment.
This then made a friendly and highly suitable environment for individuals looking to invest and seeking out mortgages. With interest rates being recorded at an all-time low, it seems like the perfect time to enter into a fixed return mortgage.The decision however, also largely differs from location to location. Some places such as London require a bigger financial commitment and so such places are not being touted as very popular for home owners.
Experts are of the opinion that banks would focus more on elderly, who have some cash and savings accumulated. An accurate answer to how Brexit affects the mortgage can only be narrated by time itself. Even the best of the experts can never be right all the time and care must thus be taken when making any investments.
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