Mortgage advisers confirm the effects of Brexit on UK housing market

Written by Oliver Wade

Mortgage advisers have predicted “virtually no growth” in business levels in the first quarter of 2019, revealed Paragon’s latest Financial Adviser and Confidence Tracking (FACT) index.

This forecast places expected growth in mortgage transactions during the early part of 2019 at their lowest level since the onset of the global financial crisis in 2008.

The index surveyed UK mortgage intermediaries and found that, according to them, Brexit uncertainty had and will continue to weigh heavily on the UK’s housing market, at least until current political negotiations point towards a more definitive outcome.

When reflecting on the second half of 2018, 57% of advisers felt that Brexit had a negative impact on demand for properties, 56% said it had put downward pressure on property prices, and 44% reported a dampening effect on the availability of property. In contrast, just 5% highlighted a positive impact when taking these considerations into account.

When questioned on the impact Brexit is likely to have on the market in the early part of 2019, the overall expectation from mortgage advisers was that negative effects would intensify before the market sees improvements.

Despite the market disruption, very few advisers said they would take the opportunity to change the way they voted in the referendum if given the chance. Just under half (47%) said they would still vote to remain, one third (33%) reported they would still vote to leave, while 3% – in each case – said they would switch their vote. The remaining 14% decided to keep their preference private.

Alongside lower levels of business activity, the Q4 2018 FACT index also highlighted an increase in the proportion of remortgage business, up from 37% in Q3 2018 to 43%, together with a slight drop in the proportion of customers opting for a five-year fixed rate mortgage, down from 46% to 43%.

John Heron, Managing Director of Mortgages at Paragon said: “Brexit uncertainty is causing a measurable slowdown across the UK housing market as potential buyers and sellers adopt a ‘wait and see’ approach. As political negotiations move into the final phase, hopes are high for a workable solution and a much-anticipated Brexit bounce.”

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