The impact of Brexit on the mortgage market
2017, economists told us, would be a tough year for UK GDP growth
They said the economic fallout from Brexit would weigh heavily on investment and consumer spending, while former Chancellor George Osborne talked of an immediate emergency Budget in the event of a vote to leave the EU.
But those things didn’t happen, and to the surprise of many Remain voters, the UK economy remained resilient as we headed into 2017.
Business confidence is relatively high and purchasing managers are not expecting a fall in investment over the coming months.
Earlier this week, the Office for Budget Responsibility, the independent watchdog established to scrutinise Government spending, also revised its forecast for annual economic growth up to 2%. This makes the UK one of the fastest growing economies in Europe, and a number of think tanks and other expert bodies suggest the 2% figure is actually too conservative. At the same time, economists now expect Government borrowing to decrease from the initially predicted rate of 3.8% of GDP in 2016 to just 2.6% in 2017, leaving more money in the public purse and a lower Budget deficit.
So what does this mean for the everyday consumer? Well, borrowers can be reassured that the Bank of England seems unlikely to raise interest rates anytime soon. Although GDP growth has so far defied expectations of a post-Brexit slowdown, inflation is rising rapidly and many members of the rate-setting Monetary Policy Committee (MPC) are concerned. With the Government set to trigger Article 50 by the end of the month, the Committee is also preparing for another fall in the value in the pound and will not be inclined to take any risks. Homeowners with variable rate mortgages probably will, therefore, continue to benefit from a low-interest rate in the near future. It’s a good time to buy.