Bennison Brown | How Brexit Uncertainty Is affecting House Prices and…

Effect of Brexit Uncertainty On House Prices

What is the latest on Brexit?

As a result of the failure to find an agreement in Parliament as to the way forward, Prime Minister Theresa May has asked the European Union to give the UK further time to reach an agreement as to how we will leave the EU.

The UK currently faces a hard deadline of April 12 when it will leave the EU without a deal if one has not been passed by Parliament.

Mrs May has now engaged in talks with the Labour party to explore ways of reaching a consensus and agreeing a deal that could be put to the EU.

In a recent interview with Sky News Mark Carney Governor of the bank of England stated the risk of a no-deal Brexit is now "alarmingly high". He rejected suggestions previously made by Lord King his predecessor at the Bank that it would be easy to prepare for a no-deal Brexit in the strongest terms “Forget the fiction . . . it’s absolute nonsense. It needs to be called out,” said Mr Carney.

He also defended the Bank’s gloomy forecasts for what a cliff-edge Brexit would mean and denied they amounted to scaremongering.

 

Effect on house prices

In our last update we reported that data from the Halifax showed house prices rising by 5.9% in February compared to January with the annual growth rate of 2.8%. Whilst house prices held up more than expected in March they still fell by 1.6% compared to February which is less than the 2.4% fall predicted by economists. The annual rate of growth also slipped back to 2.6%. The better than expected performance was attributed to supply constraints which outweighed uncertainty over the Brexit process.

 

How are Interest Rates impacted?

 At its last meeting the Bank of England’s Monetary Policy Committee voted unanimously to keep interest rates on hold at 0.75%. However, the future direction of interest rates is still uncertain with economic forecasters split in their views as to what may happen. Much will depend on the final terms of our exit from the EU.

 If you have any concerns regarding the impact on your current mortgage arrangements our advisors will be happy to review your current situation and recommend a course of action.

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