Could Brexit bump up your mortgage?

All the talks going on at the moment about the EU vote on the 23rd June have resulted in thousands of people asking the question-‘how will Brexit affect our mortgage?’

The stories that are doing the rounds currently are that a vote to leave the EU will result in soaring mortgage rates and plummeting house prices. So do we need to worry or is it just scaremongering?

Chancellor George Osborne says that a vote to leave could cause economic uncertainty which could lead to the value of the £ falling. If this happened import costs would increase leading to price hikes and a rise in inflation. All of this could force the Bank of England to increase interest rates. And an increase in interest rates means an increase in mortgage payments. But the key word Mr Osborne uses is ‘could’ not ‘would’, meaning it’s not something that will definitely happen.

Unfortunately there isn’t enough being published about what the financial experts are saying which goes against the chancellors’ view. They say the Bank of England is loath to put up interest rates, even when inflation rises. In 2011 inflation went to 5%, more than double its target, but the BoE didn’t touch interest rates. They said a rise in interest rates would cause more issues than temporary high inflation.

Since the financial crisis of 2008/09, the Bank of England has kept interest rates at historically low levels. This means it’s actually one of the easiest times to keep up with mortgage payments and pay down your debts.

If we stay in the EU, the Bank’s plan is to gradually raise interest rates as the economy improves. Mortgage borrowers should have time to think ahead and hunt for good mortgage deals.