House prices, mortgage rates and Brexit
How Brexit has affected house prices, mortgages and the housing market
In this house prices and Brexit guide:
Includes date of Brexit
Includes Boris Johnson EU Brexit deal and news of latest Brexit vote
Includes coronavirus, the economy and house prices
What is Brexit
Brexit refers to the UK leaving the EU. More than 17m people voted to leave in a referendum in June 2016.
The EU is an economic and political union which now has 27 countries and the UK is the first to leave.
Date of Brexit
The UK left the EU on 31st January 2020.
It’s still following EU rules and its trading relationship is the same.
This transition period is due to end on 31st December this year.
Boris Johnson is still insisting that the government won’t ask for an extension to the December 31 deadline when the transition period ends.
Recent talks between London and Brussels ended in deadlock as the UK wouldn’t accept EU demands that would bind them to EU regulations.
The government is planning for a no deal Brexit and will abandon trade talks with the EU unless it gives ground.
Civil servants who’d been moved on to deal with the coronavirus are now back to working full time preparing for no trade deal being agreed.
David Frost, Britain’s chief negotiator, said Britain needed to prepare for an Australian-style departure, which means trading on World Trade Organisation terms.
Talks will resume on June 1, though the attention of European leaders may well still be on the coronavirus, causing further delays.
UK house prices after Brexit
In June 2016, the month of the EU referendum, the average UK house price was £212,887, according to the Office for National Statistics (ONS).¹
That was an 8.2% rise from the year before.
The average house price in the UK is now £231,855, according to the latest ONS figures (March 2020), a 2.09% rise over the last 12 months.
But the average house price fell by 2.1% from February 2020 to March 2020.
There may be “increased volatility” in the current figures, according to the ONS.
This is because the frozen housing market during lockdown led to fewer transactions.
Are house prices going up or down where I live
Average house prices have increased over the last 12 months to:
£248,271 in England (2.18%)
£161,684 in Wales (1.11%)
£152,856 in Scotland (2.16%)
£140,580 in Northern Ireland (3.80%)
House price growth has generally slowed over the last 3 years.
Read our house price guide to find out more.
House price predictions after Brexit
The real possibility of a no deal Brexit and the economic effects of the coronavirus may well cause a drop in house prices.
But how much house prices will fall is anyone’s guess.
These are just some of the predictions:
Knight Frank – 7%
Savills – 5 to 10%
Centre for Economics and Business Research – 13%
Lloyds Banking Group 30.2% over the next 3 years
Deutsche Bank – 23%²
Supply and demand often drive house prices. With the market open again following almost 2 months of lockdown, the pent up demand that saw UK prices rise in January could be even higher.
However, some of it is likely to dampen as many people’s financial circumstances change.
Some buyers have already pulled out of their purchases.
Significant recession forecast
The Bank of England is predicting that the coronavirus crisis will push the UK economy into its deepest recession in 300 years.³
So it’s unlikely that buyers will be happy to pay pre lockdown prices.
There may be a brief window of opportunity for a bargain as some people will still need to sell because of the 3 Ds - death, divorce and debt.
The other good news for buyers is that lenders are now offering certain mortgages they'd withdrawn from the market during lockdown.
Learn more about house prices and the coronavirus.
How many people are buying and selling since the Brexit vote
There’s been a drop in the number of property transactions since the vote to leave, according to HMRC.⁴
From April 2015 to April 2016 1,328,510 residential properties changed hands.
This fell to 1,189,540 in 2018/2019.
Transactions fell from 87,860 in April 2019 to 38,060 in April 2020. They stood at 86,460 in March 2020.
The drop is probably due to the restrictions during lockdown.
Are fewer people looking to buy since Brexit
The number of potential buyers has dropped slightly since the vote to leave.
There were on average 330 people per estate agency branch actively looking to buy a new home in June 2016, according to NAEA Propertymark.⁵
Numbers dropped to 322 in February 2020 from 382 the month before.
Mortgage rates after Brexit
To try and keep the economy moving, the BoE cut the interest rate to a new record low of 0.25% in August 2016, soon after the Brexit vote.
Since then, there have been two subsequent increases, bringing it up to 0.75%.
The BoE cut the interest rate to 0.25% and then to 0.1% in March 2020 in emergency moves to control the economic shock of the coronavirus outbreak.
This took the cost of borrowing back to its lowest level ever.
The rate has stayed the same since March.
Fixed mortgage rates have gone down since the vote, according to the BoE. If you put down a 25% deposit on a home in June 2016, the average rate you’d pay for a two year fixed rate mortgage was 1.75%. In April 2020 it was 1.4%.
The drop was even bigger for five year fixed rate deals. In June 2016 the average rate was 2.54% and in April 2020 it was 1.67%.
Should I remortgage because of Brexit
Remortgaging has been attractive for homeowners for some time because of competitive rates.
Approvals of loans secured on properties for remortgaging rose to 53,383 in February 2020 from 52,073 the month before.⁶
Looking at buyer habits, Brexit may have been causing more people to take out a fixed rate mortgage so they have some certainty while so many things are up in the air.
However, approvals of loans secured on properties for remortgaging fell to 42,551 in March from 53,061 in February.⁶
Again, this is probably due to the coronavirus.
Should I get a fixed rate mortgage deal after Brexit
If you want peace of mind about how much you’ll be paying for your mortgage because of the current economic uncertainty then a fixed rate for five years could be for you.
“During this period of uncertainty it's very difficult to predict what may happen with house prices and interest rates,” said Miles Robinson, Trussle's head of mortgages.
“The BoE have already reduced the base rate in order to boost the economy during this period.
“It’s still a great time to reserve a fixed rate for security of payments and certainty.
“Act early as with many lenders you can reserve a rate for up to 6 months in advance by making an application.
“You'll then have peace of mind you have a rate secured.”
All mortgage guides, calculators and deals
¹ ONS: UK House Price Index: March 2020
² Telegraph: Will house prices fall after lockdown, and what has to happen for a worst case 30pc market crash?
³ Financial Times: BoE warns UK set to enter worst recession for 300 years
⁴ HMRC: Monthly property transactions completed in the UK with value of £40,000 or above
⁵ NAEA Propertymark: Housing Report, February 2020
⁶ Trading Economics: United Kingdom Mortgage Approvals 2020 data
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