What Brexit means for homebuyers​

Effect of uncertainty on future house prices

According to data released by Halifax house prices in the UK rose by 5.9% in February compared to January with the annual growth rate of 2.8%. These figures reflect very weak performance in January and the lender cautioned against putting too much emphasis on them as volatility will be a continuing factor in the market.

In the latest quarter (December - February) house prices were 1.8% higher than in the preceding three months (September - November) 

Recent interest rates

Despite the Bank of England’s decision to increase the base rate in August 2018 increased competition amongst lenders saw mortgage interest rates hold steady and in some cases reduce towards the end of the year. However recent data shows that the average two-year fixed rates rose from 2.36 per cent in January to 2.49 per cent today. This time last year, average rates were also at 2.36 per cent.

Predictions for the future of interest rates are hard to pin down as the outcome of Brexit negotiations are uncertain leading to many conflicting opinions. In a recent report to the Treasury Select committee, Bank of England Governor Mark Carney warned that in the event of a no-deal outcome interest rates could rise as high as 5.5 per cent if a plunging pound sent inflation soaring.

Other commentators feel that such a move is highly unlikely as Central banks typically cut interest rates when they expect economic growth to slow.

The latest Economic and fiscal outlook report from the Office of Budget responsibility predicts that interest rates will creep up gradually and the Bank of England base rate may reach 1.5% by the start of 2023. 

Why people generally use fixed vs variable

Choosing a fixed rate mortgage will give you peace of mind where interest rates are likely to be volatile and gives an insurance policy against rate hikes. Ultimately the decision as to whether to fix will come down to how important certainty that your repayments will stay the same is for you. 

If you can only just afford your mortgage repayments at their current level then fixing your rate will ensure that you can maintain payments whatever short-term changes are made to the base rate. 

With all the uncertainty surrounding Brexit it has never been more important that you seek expert advice from a mortgage broker who has comprehensive knowledge of the market, and access to exclusive mortgage products which are not available on the high street.

At Bennison Brown we will conduct a thorough assessment of your circumstances and tailor a mortgage deal to suit your needs. 

Good news for purchasers 

The recent slow down in house price growth combined with recent wage growth means that likely mortgage payments are more affordable than 10 years ago. Government support through the Help to Buy schemes has also helped first time buyers get a foot on the property ladder with data from UK Finance showing 370,000 first time buyer mortgages completing in 2018 the highest number since 2006.