London based mortgage brokers, Coreco give us their view on the Brexit effect on property.
The headlines at the moment are still full of stories around what will happen with Brexit. Some are honest opinions, whilst others are clearly just out to make waves or have been taken out of context.
The latter example involved the Bank of England Governor Mark Carney. He appeared he suggested that a no deal Brexit would lead to a 30% fall in house prices. Carney is no stranger to controversy, especially where Brexit is concerned and this was seized upon as further evidence of a Bank of England Governor getting too involved in politics.
There has been some clarification since these comments went public and it does seem that they were taken out of context. Carney was meant to be briefing Ministers about the work they had done on the worst-case scenario of a no deal Brexit, stress testing UK banks to the extreme as to how they would handle such a situation. The fall in prices was just a test, not an expectation from anyone. In fact, the reverse could easily be true such are the unknowns around how people and markets actually react.
Whatever the case, it’s not helpful to make public statements like this and just adds to accusations of Project Fear.
What we need from politicians and those in senior positions [like Carney’s] is commentary that explains these risks without inflaming people. That points out the potential positives as well as the negatives.
Speculation on the effect of Brexit on property
The truth is that this is a great unknown and it is important that all of us in the property industry remain calm and not get caught up in all the speculation.
What everyone needs now more than ever is clear advice and reassurance, especially when looking for a long-term home. The reasons for purchasing remain strong; buyers still want to move out of home, start a family, move to school catchment areas or buy somewhere in a divorce scenario and this will not change. The rate of Property growth has fallen, but importantly is still growing. There are a number of voices now who believe we are already at the bottom of the market.
Indeed, if a positive deal is announced, we could well see a sudden surge in activity and all those holding off may have already missed the proverbial boat.
Now is the time for buyers to take advice from professionals within the property industry, a good buying agent for example with knowledge of the area you are looking to buy in could well be worth more than their weight in gold. Whilst for some people it may well be worth waiting to see what happens, it is always tricky to try to predict what will happen to the market. Always remember that you are buying a long-term home, rather than a short-term investment.
Mortgage Rates in 2018
Mortgage rates are still low and are going nowhere any time soon, although it does seem to make sense for more people to fix for longer for that ultimate sense of security. We are seeing more people than ever look at 5-year fixed rates and the increasing numbers of First-Time Buyers coming back to the market are expected to remain strong.
Meanwhile, Buy to Let mortgages have fallen to astonishing levels, with the best products now hardly any different to the best standard residential rates. With changes still being made in the Buy to Let arena, it is essential that landlords revisit their portfolios to ensure they are getting the best rates and protecting themselves for the future.
In fact, the final part of the year is shaping up to be busier than many people think and no matter what the future may or may not bring, it pays to be positive without losing sense of reality.