One benefit, or drawback depending on how you look at it, is the fact that house prices may go down in Wolverhampton after we leave the EU. Will it fix the housing crisis and give young people a chance to get on the ladder? Or will it leave homeowners in the red?
Mark Carney is the Governor of the Bank of England and Chair of the Monetary Policy Committee he has warned that property prices might drop by up to third after a ‘no deal’ Brexit. He did say, however, that those with existing mortgages should still be able to afford them thanks to checks in place. ‘More than half of mortgages in this country are fixed rate mortgages,’ Carney said. ‘When you take out a mortgage, you have to pass an affordability test, and you have to be able to pay a mortgage at 7%. ‘It’s something we put in place so that if costs were to go up, people would be able to meet those mortgages.’
Particularly in London, there could be a marked difference depending on the outcome of Brexit. A survey of property analysts in the capital found there was a one in three chance of a ‘significant correction’ in the London market. The median chance of a correction (short-term dip) predicted by the analysts was 29%, although some foresaw a huge 75%. Some said prices in the capital may fall during this by 40%, dependent on whether interest rates change. As with most Brexit-related business, it’s hard to tell what will happen since we don’t have the final details of the deal. It doesn’t look too great for sellers at the moment, however.
The Bank of England governer says the financial system and banks will be ready for that ‘undesirable’ scenario, which could include: Commercial and residential property prices going down by more than a third interest rates soaring unemployment increasing to 9% the economy contracting by 4%. However no one really knows there is a chance that in Wolverhampton and the midlands we may no see any change as Brexit progresses. But there is always a but a fixed rate mortgage will always give peace of mind and monthly fixed budget to work with which is what most clients prefer. If you need mortgage advice or have any questions call us on 01902 213201