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Will Brexit Make my Mortgage More Expensive?
Date: July 28, 2016
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The short answer is that no one knows for sure how Brexit will affect lending, if at all, but the biggest tool we have for predicting this is the current uncertainty surrounding the market. You see, when there is this level of economic uncertainty rates tend to increase as banks cover the risk.
Britain has never left the EU before and so it is only natural that there is uncertainty regarding what will now happen. This uncertainty may also cause an increase in demand for mortgages from families, couples and individuals who are scared of potential future increases and an increase in demand naturally also increases mortgage rates.
At present there are millions of people sat on SVRs because they are slightly lower than normal, however the truth is that these rates can and will increase at any time. Banks can increase the SVR at any time, regardless of the Bank of England base rate (BEBR). But, because the BEBR is low at the moment there fantastic fixed rate deals available. When the BEBR finally does increase lenders will have already anticipated this, and the inevitable large rush of clients who then want to change their mortgages, and will have already increased the costs and fees of the mortgages on offer. So now is most definitely the time to get a fixed rate on a good deal.
What is right for you varies depending on your circumstances. So, a young couple with no kids and surplus income may be happy to wait out the short-term uncertainty or opt for a short-term fixed rate mortgage or variable deal. In this scenario the individual would have to be happy to take the risk that rates may increase in the near future for a chance that they may actually drop. However a family or individual on a tight budget will want long term stability and so may want to look at a long-term fixed rate mortgage deal. It’s simply about looking at all possible outcomes and options and working out what is right for you. (If you’d like some free expert advice on the options you have, give us a call on 01642-318419 or email us)
Naturally most people want the cheapest mortgage deal but it is so important to think about what happens after the cheap two year fixed rate ends. So, if you’re a family on tight budget our team of expert mortgage brokers may recommend a five year fixed mortgage on a slightly higher rate that you are able to afford than a cheaper two year alternative after which you could be in for a shock if the rates have increased.
If you are single or have expendable income each month and can afford a higher rate in the future, you have the option of taking a cheaper short-term deal with the gamble that rates won’t be higher in two years.
One thing we would advise you to bear in mind is that the key is to figure out what you can’t afford to pay in the future rather than hoping something gets a little cheaper now, it’s essentially about minimising risk.



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