No one really seems to know what might be in store if Britain were to leave the EU – the so-called Brexit that we are to vote on in June. However, according to Prime Minister David Cameron, mortgages could become more expensive if we did leave the European Union.
However, there are a few pertinent points that are worth making about this, in order to determine whether this would actually be the case. Firstly, the pro-EU campaign has been referred to as Project Fear. That tells you a lot about the stance they are taking in trying to convince anti-EU voters to switch to their way of thinking. In reality, no one knows whether interest rates would rise. There is no way of telling unless and until a vote for Brexit were to happen. There is a chance nothing of the sort would happen at all.
Would a rate rise be a bad thing?
Plenty of mortgage holders have locked themselves into a long-term mortgage deal already. There are plenty of deals on the market, running for two or five years, for example, that represent great value for money. Those who have yet to take advantage of such a deal still have plenty of time to do so before the vote takes place – just in case the warnings the Prime Minister is giving turn out to be true.
Obviously, those who have fixed rates in place, have paid off their mortgages or have nothing but savings, would welcome a rate rise.
Would it be prudent to have another fall in interest rates?
In order to consider whether a rate rise would be a bad thing, we should also look at the very real prospect of rates heading in the other direction. The current rate is 0.5%, but while experts previously stated rates could rise, they are now suggesting they could go even lower. It is possible we could have a 0% rate – or even a negative rate.
This might sound like a good thing, but if the situation in Switzerland is anything to go by, the super-low mortgage rates at present could be about to end. When the rates in Switzerland reached negative figures, the mortgage rates actually started to go up.
In essence, then, a rate rise may be a good thing in the long run. Of course, we have no idea whether a Brexit could result in a rate rise at all. Thus it is an important time to consider the mortgage plan you are on, and whether you could get a cheaper deal in the near future – regardless of what may happen.
In reality, no one knows whether our departure from the European Union would have positive or negative results. Many seem to think it will be largely positive, but it remains to be seen what will happen. But looking solely at interest rates seems to indicate that locking in a good deal now would be a very smart thing to do indeed.