In the immediate aftermath of Brexit Vote, former Chancellor of the Exchequer, George Osborne, suggested that British Economy will need to adjust itself according to its new configurations. The worrying reasons were further fuelled when officials at the Bank of England depicted that economy will witness a steep declined as businesses and household will put their financial spending on hold. The recent financial report issued by British Banker’s Association shows this depiction holding true.
In the report, the British Banker’s Association declares that
Brexit has caused the numbers of mortgage approval hit an 18 month low.
Things become clear when we consider these stats; around 37,000 mortgage applications were approved in last month (July 2016) compared to 46,000 loan approvals in July 2015. This is an 18% dip in the ratio of mortgage approvals, which is a huge blow.
Despite the report, the Chief Economist at British Banker’s Association, Rebecca Harding, is of the view that it is too early to predict the effects of Brexit on the housing market. She reckons that most of the current developments are amid decisions taken before Brexit. She claims that the businesses are doing fine as they are borrowing on usual rates.
This view is reinforced by the resilience shown by overall housing industry in the UK. For instance, Housebuilder Persimmon has recently shown a 19% up in the pre-text profits. This is a record high after the vote. Moreover, borrowing by non-financial firms reached to £2.3 Billion during the last month, after a slight slump during the month of June. These signs show that businesses are interested in making investments, despite a low after Brexit.
Samuel Tombs, however, thinks the situation to be other way round. While passing his views on the bad mortgage situation, Chief Economist at Pantheon Macroeconomics, interprets that it is the vote which has resulted in such low ratios of mortgage approvals.
Tombs further sheds light on immediate future of the British housing industry that with inflation revival looming large over us and lesser people getting jobs in coming days, things will grow worse. He is also of the view that individuals, as well as businesses, will grow conscious of making investments.
This situation is worrying for businesses and individuals alike. With the situation interpreted by Tombs, the interest rates on the mortgage are expected to rise up, sooner or later. The need of the hour is that you look on your own mortgage and evaluate if you have a standard changing rate on it, because you would not want to be paying increased interest amounts, amid the vote.
A better practice involves getting the counsel of a professional mortgage broker. A broker with years of field experience and knowledge of the changing marketplace will help you devise plans for your mortgage interest payments. Apart from the instalments, he will be able to guide you about the best time to make investments in the real estate business, in future.