Earlier this year Theresa May formally triggered Article 50 and began an extensive two year process to leave the EU. Ever since the divisive EU referendum last year, there’s been plenty of uncertainty regarding the impact Brexit will have on individuals’ finances.
In the immediate aftermath of the referendum result, interest rates plummeted as the stock market was thrown into turmoil. The market has since shown significant signs of recovery but interest rates have remained low.
For savers, low interest rates have offered very little incentive to save, but for those taking out mortgages, it’s been a blessing. According to the Council of Mortgage Lenders, home loan affordability has reached a ‘historic low’ for both first-time buyers and home movers.
Many home buyers have been making the most of the opportunity to lock themselves into cheap mortgage deals. In September, first time buyers spent an average of just 17.8% of their monthly household income on mortgage repayments.
By November, the average five-year fix had fallen below 3% for the first time on record, standing at 2.98% compared to 3.93% in November 2014.
It’s difficult to determine exactly how the markets will react to the economic uncertainty brought on by Brexit. But with rates currently at a record low, it makes sense for those who are able to fix their mortgage rate to do so before the inevitable rises do eventually occur.
If you’re nearing the end of your current fixed rate deal, it may be worth comparing products from across the market before locking yourself into another low rate. There is of course a chance that rates could fall further, but to avoid the risk of extortionate rises, it may be wise to fix sooner rather than later. A fixed rate can give you protection from the turbulent and unpredictable market.
Longer fixed rate deals of five to ten years may be the most comfortable and secure solution, though they’re unlikely to offer such low rates as two year deals.
Andy Knee, chief executive of LMS says that the political and economic uncertainty of recent months has impacted people’s priorities: “More people are looking for long-term security. They want to ensure they know exactly what they will owe and when while the terms of Brexit are battled out.
How To Protect Your Mortgage From Brexit Uncertainty
Earlier this year Theresa May formally triggered Article 50 and began an extensive two year process to leave the EU. Ever since the divisive EU referendum last year, there’s been plenty of uncertainty regarding the impact Brexit will have on individuals’ finances.
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