If there is one thing that has been a continual theme since the Brexit referendum on June 2, 2016 it is uncertainty – and that is not particularly good for housing market confidence.
With withdrawal dates shifted on more than one occasion, not to mention a couple of changes of Prime Minister, it is surprising that market confidence has remained at the level it has.
So, what does the future hold for housing prices and mortgage rates in the wake of Brexit? Yes, that still remains somewhat uncertain.
The good news, however, is that popular opinion does appear to be moving away from the doom and gloom disaster forecasts that circled concerns of a ‘no deal’ Brexit.
Moving away from ‘do deal’ doom and gloom
This can only be good as some predictions were going as far as to suggest that as much as 20 or 30 per cent1 could be wiped off the value of property in the event of a ‘no deal’ Brexit, which understandably would hit the housing market extremely hard.
Yet, while predictions have been revised rapidly upwards of such dire forecasts, the air of uncertainty remains. Yes, Brexit has officially taken place but the UK is yet to strike a deal and time will only tell what happens.
The Government was given an additional 11 months to thrash out a deal to move trading conditions forward with a deadline of December 31, 20202. Hopefully a new trade deal will be in place by this point, however, if it is not the prospect of a no deal Brexit once again rears its head – and those shocking predictions.
And here is the struggle for the housing market – homeowners are understandably jittery about committing to a higher mortgage that they may not then be able to afford should their job be affected by a negative impact on the economy. Homeowners will also not want to sell at a lower price if there is a chance prices may rapidly rise.
Improvements after slowdown in growth
This also is not out of the question as Brexit has led to house prices pretty much stagnating3 since the announcement of the pro-Brexit result in 2016, recovering somewhat following the general election result in December 2019.
Thankfully this uncertainty has been tempered somewhat by a commitment to low interest rates, meaning mortgage rates continue to be low, allowing first-time buyers to get on to the ladder and supporting home buyers who feel in a position to commit to a move.
So, what does the future hold? Most industry experts have committed to suggested a low rise in growth throughout the year with prices growing by 2 per cent4.
Meanwhile the base rate has been maintained at 0.75 per cent, although there are concerns that a fall in the value of the pound and the cost of long-running economic uncertainty could force a cut.
Low interest rates expected to remain
A cut in the base rate would mean mortgages enjoy lower interest rates, which is good news for homeowners who are not concerned with saving rates.
While a more stable outlook in the event of a strong trade deal could theoretically see rates increase, the continued uncertainty does not indicate that as things stand and growth is more likely to remain somewhat sluggish.
In short, house prices may enjoy small growth while mortgage interest rates should remain low, enabling those in a position to do so to re-mortgage or invest in property – although a huge amount of uncertainty will continue to surround the economy until a Brexit deal is finally done.
Anthony Stockton Solicitors delivers affordable conveyancing services across the Midlands, offering personalised professional property support.
Call us on 0800 652 37 37 to speak to a member of the team or use our enquiry form to request a consultation.
Anthony Stockton Solicitors
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0121 289 3088