Almost a year after the British public voted to leave the EU by a margin of 2 percent, Theresa May finally triggered Article 50 to begin the leaving process. Immediately after the result was announced, the pound sterling dropped to a 31 year low, and in March 2017 Deutsche Bank warned that it could still drop by a further 15 percent by the end of this year. The drop in the pound was the beginning of financial uncertainty in Britain, and many were left wondering what would happen to their finances, mortgages, and they had a great deal of monetary concerns.

Brexit ReferendumThe short answer at the time was; no one knew. Several scenarios were presented: the Bank of England might decide to raise interest rates, or cut them. Or, they could stay the same. When asked for an in depth answer of how Brexit would affect their move, the Treasury Department predicted that borrowing costs could increase to as high as 1.1 percent if Britain left the EU. However, they also forecasted a fall in house prices of up to 18 percent, which was a good indicator that the country was headed towards a buyer’s market. Other experts predicted that mortgage rates would rise following Brexit. Now, nearly 14 months after the Brexit vote, some of the effects on our finances are starting to become clearer.

A combination of the Bank of England’s decision to halve Bank Rate in August 2016, and investors seeking a safe haven for their money in British government bonds due to fear on instability, has seen savings rates plunge to a record low following Brexit. As for the mortgage rates; they fell. This was partly due to an increased competition in the mortgage market, as lenders chased a smaller pool of borrowers. HSBC whipped away its cheapest ever mortgage – a two-year fix at 0.99pc on December 6 – and increased the rate on on other deals. Under the leadership of CEO Antonio Osorio, Lloyd’s Bank – Britain’s biggest mortgage lender – was brought into full private ownership in May 2017, which might also have an effect on mortgage rates. Osorio acknowledges the new set of challenges posed by Brexit for financial services, but remains committed to doing right by his customers.

He said: “One of the things that has surprised economists and the markets over the past year is the robustness of the UK economy in the wake of the referendum result.  Consumers in particular appeared to shrug off the implications of the vote and continued to spend, providing a key driver of economic growth over the past year. But clearly, the shorter the period of uncertainty regarding the UK’s future relationship with the EU, the better.  Businesses need certainty about the legal and regulatory environment in which they will be operating, so they can plan accordingly and make investment decisions.”

The pattern of gradual increases in rates looks like it will continue, so it’s best to remortgage to one of the best fixed-rate deals if possible.

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