The date of the referendum on Britain’s membership of the European Union is set – Brits will get a vote to decide on 23rd June this year. Since we found out when the vote will take place, many have been speculating on the effects a possible Brexit could have on Britain.
Most notably for our purposes, some have questioned whether interest rates might rise if Britain votes to leave the EU. This in turn has led to a spike in mortgage applications by people hoping to secure a good deal before anything like this has a chance to happen.
Why might interest rates rise?
There is speculation the pound could be affected and lose value – perhaps up to a fifth of its current value – in the event that Britain does leave the EU. While we have no idea whether this would happen or not, the pound has lost some value in recent days, since the referendum was officially confirmed.
Is it true rates could rise?
No one is actually sure. However, the In campaign has said they will, and this in turn will make mortgages more expensive. Therefore, it should come as no surprise to learn that many people have already started making mortgage enquiries, ahead of the referendum date in a little over three months’ time.
One mortgage lender – deVere Mortgages – has noted a 30% increase in enquiries in the past week or two. If this was replicated across the entire market, it could be indicative of a rise in mortgage applications in the coming months.
Would mortgages be affected if the vote did support Brexit?
Many experts have stated that a Brexit would do very little damage to the mortgage market in the UK. Clearly, many people are keen to lock in a cheap mortgage before the vote if at all possible, just in case the market was affected by a rate rise. However, it looks more likely that any changes would be very minor, if they occurred at all.
Of course, no one can be completely sure of what will happen if a vote to leave does prove to be the bigger slice of the pie. However, one thing seems certain – we are likely to see more mortgage applications put in over the next three months or so prior to the vote taking place. This will ensure people can get access to super-low mortgage rates and lock in a great deal for at least two years to come. It may even be worth getting a five-year deal for a slightly higher interest rate, in case the warnings about rates rising do come to pass.
Both campaigns will be keen to put their message across in the coming weeks. So far, the In campaign seems keen to follow a doom-and-gloom path, which doesn’t seem to be the case for the Leave campaign. Whichever route the majority of people decide to follow, we can expect more mortgage applications to come in very soon.