As part of our quarterly newsletter, Chris Croake, Director at Choice Financial Solutions will answer a typical question we receive on a daily basis from clients who need mortgage advice.
Question: How will the EU referendum likely affect mortgage rates?
A. If the UK were to leave the EU then I do not think anyone truly knows the effect it will have. On one hand we still have the fastest growing economy within the EU and we still have consumers wanting to buy houses. On the other hand, an exit could de-value sterling and may affect inter-bank lending to UK institutions, which will in turn potentially push mortgages rates higher.
Personally I am sat on the fence. I do think that there will be a large amount of uncertainty for a period should we exit the EU but I also believe that things will settle down in time. With the world economy as it is, I cannot see the Bank of England increasing the base rate to anything like historic levels and believe we are in a low interest rate environment for a long time to come.
I do not therefore think that borrowers have anything to fear rate rise from an EU exit in itself but uncertainty is never good for the wider economy and it could that uncertainty that fuels a greater economic slowdown.