Is Brexit putting the brakes on the property market?
Brexit has caused a slowdown in purchase activity as would-be buyers sit on their hands, waiting for the outcome before committing to something as major as buying a new home. This has meant less business for lenders, yet they remain keen to lend. They run big operations and want their staff to be busy, so have two options – either change their risk profile or their mortgage pricing. Changing risk profile is more challenging, while making mortgages cheaper is easier, so that is what many of them are doing.
As a result, mortgage rates have been falling this year. There is an abundance of supply, with the ‘big six’ lenders dominating but there are also a number of challenger banks, such as Metro and Virgin Money, who are coming through and offering lots of competition and innovation. This is good news for borrowers.
Fixed rates remain popular for those who are worried about potential interest rate rises but there is a chance that rates could fall if we slip into recession and Brexit doesn’t work out. Who wants to be stuck on a ten-year fix if that happens? We always suggest to clients that if you can afford to be wrong, then you can take a view on a variable rate but if you are on a tight budget, then a fix makes a lot of sense. Five-year fixes seem to be the preferred choice, with some deals starting from sub-2 per cent. However, it is important not to fix for longer than you are absolutely sure about or you may have to pay a hefty early redemption charge to get out of the mortgage early.
Share This Article
To improve our website and provide more personal services to you, we would like to store cookies on your device. See More