Mortgages get cheaper following Brexit vote

Well, at the time of writing, it’s two weeks today since the result came in that, as a country, we voted to leave the European Union, and it is clear that we are now in a slightly more topsy turvey world.

The positive is that there has been no negative effect as yet on the housing market. While commercial property and the London market show signs of being negatively affected, what I have seen so far for normal people on the street, has only been positive where mortgages are concerned.

Ultimately we all still need somewhere to live, this means that people like you and I are continuing to buy and sell houses. Young people still need to get on the housing ladder, families still need to move into bigger houses as their family grows and older people will continue to want to downsize as the family home gets too much to manage after their children have flown the nest.  In addition, with the stock market rising and falling at a rate that would rival any roller coaster, people still want to invest in property to let out as housing is starting to look like a safe bet.

The good news is that lenders still have a lot of money to lend and mortgage rates have actually dropped in the past two weeks.  Since the Brexit vote fixed rates have fallen and are expected to drop to under 1% in the next week or two.

Other lenders have introduced cheaper ranges of buy-to-let mortgages, which means that it now costs less per month when you buy a house to rent out.

At the same time some lenders want to offer certainty in this uncertain world and several have introduced ten year fixed rate mortgages. This means the people taking out these mortgages will know exactly what they are going to pay over the next ten years.  Therefore even when mortgage rates rise, which they inevitably will do in the longer term, mortgage holders with ten year fixed rates, will still be paying the same low rates that they are now.

So why are lenders suddenly cutting their rates?  The fact is that most lenders get the money they lend from the money markets from what are called ‘swap rates’, and the rates here have fallen, so lenders can pass the savings on to the public.  In addition, there is a wide expectation that the Bank of England will cut the base rate of interest and will put more money into the markets.  All of this is good news for borrowers.

As with everything at the moment, no-one knows how long this is going to last, so if you are thinking of getting onto the housing ladder – or if you haven’t looked at your mortgage rate for a while, now is a good time to give us a call as you could be saving money using our fee free re-mortgage service, not only now but for the long term too.