There are widespread predictions of doom and gloom for the economy following Brexit, including for the property market. But are things likely to be as bad as expected for buyers and sellers? Or could now actually be the time to make a move?
Just a few days after the referendum vote, the British Bankers Association (BBA) released figures showing the number of mortgage approvals from high street banks rebounded in May to 42,187, up from 39,967 in April.
The bounce back comes following a steep drop in April, caused by the initial reaction to the Stamp Duty surcharge. New rules, announced by the Chancellor in his latest budget mean those buying second homes must how pay three per cent more in Stamp Duty fees.
Gross mortgage borrowing was 10 per cent higher than May 2015, at £12bn, while net borrowing was up by three per cent.
There are, however, now fears of an extended downturn in the housing market following the vote to leave the EU. A combination of an expected increase in unemployment and a decrease in consumer confidence could leave the market floundering.
But it may not be all bad news. Many analysts expect interest rates to drop to 0.25 or zero per cent in the coming months as the falling pound boosts inflation.
While this would spell more misery for savers who have lost out since the start of the 2008 financial crisis, it would be welcomed by borrowers who have seen the cost of mortgages fall.
For those who already have their deposit or finances in place, now could be the time to buy. Mortgage rates are, at least for the time being, continuing to plummet.
Mortgage interest rates were already hovering near historic lows before the Brexit vote. Now, many have been kicked down another notch.
HSBC, for example, has announced a low headline rate of 0.99 per cent for a two-year fixed deal, while Darlington Building Society has a special rate of 1.45 per cent to encourage local people to use their local building society for their mortgage. With each deal you’re exploring, however, it is vital to look at upfront fees and loan-to-value criteria.
Lenders are also trying to attract investors with reduced rates on buy-to-let properties. Big names including Santander and Nationwide along with smaller providers have already dropped their rates or raised their maximum loan-to-values for landlords looking to remortgage or invest in new properties.
While, so far, Brexit has been terrible news for the pound and for the stock market, it could be an opportunity for borrowers to either lower their monthly payments, reduce the term of their mortgage or take out some cash.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise.
For further information please contact Martin Williamson on 01325 341500