You were happily looking for a new property, or to sell your property, and the country voted for Brexit. What seemed like a solid, healthy investment may now seem less reliable. So should you continue with your purchase (or sale) now that the UK has decided to leave the EU?
The Governor of the Bank of England, Mark Carney, has recently announced that interest rates may be cut following the shock vote last week. The Bank of England’s full statement, released the day after the Brexit announcement, can be found here: /bank-england-releases-statement-following-eu-referendum-result/
Should You Continue With Your Property Purchase or Sale Following Brexit?
If interest rates do come down, then mortgage costs will inevitably be affected, which could give you the opportunity for a better deal.
So, if you’ve had your offer accepted, secured a mortgage and maybe even exchanged contracts, should you pull out?
Naturally, if you have exchanged contracts, then there is nothing you can do without incurring significant penalties. However, if you haven’t got this far, it may be worth waiting to see whether mortgage rates come down in the near future. If they do, you could possibly renegotiate your mortgage to get a better deal.
The majority of mortgages are offered on a fixed rate basis. However, if interest rates remain as low as expected, it could be more affordable than ever to have a tracker mortgage.
Some lenders will allow you to change your mortgage if you pay an arrangement fee, although this changes from lender to lender. It is important to keep in touch with your mortgage provider at this time, to find out which deals are available and how much it would cost to renegotiate.
If interest rates drop by a quarter point or so, which is likely, and your lender does not react to the change, but others have and are offering better deals, it could be wise to change. However, be aware that this could take some time and could be costly.
Although Zoopla reported before the EU referendum that house prices would fall by 20% if we voted to leave, the latest house price indices suggest that values are continuing to climb. Whether they decline or not will be down to wider economic conditions, although current uncertainty may lead to a decrease in transactions.
If demand does wane, this could actually be a good thing for buyers. Fewer homebuyers in the market will give greater buying power and the opportunity to negotiate lower prices.
If you have been looking for a property for a long time and have finally found the one you want, it’s a good idea to go for it at this point in time, as property prices don’t look to be coming down substantially.
However, if you’ve only recently started your search, it could be wise to hold tight for a while to see whether prices come down.
General economic uncertainty will naturally affect the housing market, particularly in the near future. But since the UK will not officially leave the EU for two years, the sector will likely stabilise in this period.
If the markets do slow down in terms of activity, then mortgage lenders will need to be more competitive, which is positive for homebuyers and movers.
The London property market especially is expected to remain buoyant during this time, which is particularly good news for investors, who may find bargains during this volatile period.
Whether you decide to wait and see what happens to house prices and mortgage rates or take the plunge, the property market appears to be holding itself up in the face of uncertainty.