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Should I Get a Mortgage Following Brexit?

At the end of January, the UK farewelled its membership of the European Union. Brexit Day was many things to many people, but to those looking to buy a home it was largely seen as a day of uncertainty.

typical residential street in England

Whilst negotiations continue as to what our exit from the EU looks like, and how that affects British citizens going forward, for now many of the mortgage systems you are used to will continue.

As decisions are made as to how tightly we stick to EU regulations, the industry will get more of an idea as to how much change the mortgage market faces in the long term.

One example of how things could change is if Britain stopped following the EU mortgage credit directive, which was framed to protect consumers. The flaws in this legislation are seen as the reason behind a generation of ‘mortgage prisoners’, locked in with their current lender and obliged to pay unceasing fees with no way out due to stringent affordability checks from other banks.

But let’s look outside of laws and regulations, and discuss the market. Because for now, that is the key place to look when making a decision due to the unpredictable nature of the negotiations.

When Brexit was first voted for in 2016, the prevailing wisdom in the housing industry was that the market was set for a fall. That would seem a boon for those entering into it. As late as the end of 2018 the Bank of England stated that house prices could fall by around 30% in the case of a no-deal Brexit.

However, now that Brexit day has come and gone with less drama, the industry is more optimistic. Many in the field are predicting a 1-3% rise this year. But does this mean you should hold off on that mortgage? Not necessarily – these numbers are taken at a national level, meaning where you want to buy and what your situation is play a huge role in dictating this decision, and a 3% rise is not particularly dramatic in the UK.

Another consideration for borrowers is, of course, the Bank of England’s base rate – which many mortgage rates are tied to. This was dropped for the first time in years following the referendum, but has since risen to 0.75%. But as with regulations and the market, experts just can’t predict what will happen, with loads of uncertainty still in the mix with our UK departure.

So, should you get a mortgage following Brexit? The best advice is probably to not to try second-guess external factors in an uncertain period, but rather to focus on your personal finances and speak to an experienced mortgage broker.

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