In the wake of Brexit, the Bank of England is predicted to cut interest rates for the first time in seven years tomorrow. Kevin Ross, at Brown Turner Ross solicitors, predicts that this can only be a good thing for the property market and help keep the economy buoyant:
A cut in the interest rate may affect the mortgages that will be on offer to buyers, with some very attractive offers becoming available. It would also affect those current borrowers that are on variable or discounted rates.
The impact is even bigger if the borrower has an interest-only mortgage, although these have largely disappeared since the credit crunch.
If you are on a fixed rate mortgage then your rate is pegged until the fixed rate expires so there will be no change for you. However, people looking to buy in the near future should expect some very attractive deals in the next few weeks if the rate is cut.
We would not expect all lenders to pass on the full extent of the cut and of course many banks have still not reduced their standard variable rates (SVRs) to anywhere near the 0.5% base rate.
Post-Brexit, there has been much talk of falls in house prices with some experts predicting that house prices would drop nationally by 10%, and more in London. We have heard that some buyers have pulled out of deals. At Brown Turner Ross that has not been our experience from dealing with transactions across the country.
Overall we feel that the shortened process to appoint a new Prime Minister and an interest rate cut may stabilise the market, with nervous buyers happier about going ahead and there being greater confidence generally.
(Source: Brown Turner Ross)