House prices, mortgage rates and Brexit
How Brexit has affected house prices, mortgages and the housing market
In this house prices and Brexit guide:
What is Brexit
Brexit refers to the UK leaving the EU. More than 17 million 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 31 January 2020.
It’s still following EU rules and its trading relationship is the same.
This transition period ended on 31 December 2020.
Prime Minister Boris Johnson was forced into self-isolation for 14 days after coming into contact with someone with coronavirus just as Brexit talks reached a crucial stage.
Rows over the internal market bill are still going on. It was approved by the House of Commons in September but is encountering strong resistance in the Lords.
Peers voted by 367 to 209 to amend the Internal Market Bill, after claims that it would allow the UK government to ‘shackle’ devolved administrations as powers are returned from Brussels.
And they voted by 327 to 223 to curb ministers' powers to rewrite parts of the bill at a later stage.
The proposed law aims to create a UK-wide internal market after the Brexit transition period ended on 31 December 2020.
There were fears about how the food chain could be affected after the transition.
Police chiefs also warned that a no-deal Brexit could damage their ability to fight crime.
Are house prices going up or down where I live
Average house prices have increased over the last 12 months to:
£261,795 in England (4.9%)
£170,604 in Wales (3.8%)
£161,510 in Scotland (4.3%)
£143,205 in Northern Ireland (2.1%)
House price growth has started to pick up since lockdown restrictions were lifted in the summer.
Learn more in our house price guide.
House price predictions after Brexit
At the beginning of the year most experts were predicting that house prices would drop this year. But some have changed their predictions, and expect prices to rise.
This could mainly be due to higher demand post-lockdown.
However, the Centre for Economics and Business Research predicts house prices will fall by almost 14% next year once the government’s temporary cut in stamp duty ends and the economic impact of coronavirus filters through to the property market.
Here are some of the predictions for how much house prices will change:
Savills +4% ²
Centre for Economics and Business Research -10%. ³
Lloyds Banking Group -6% ⁴
EY Item Club -3%⁵
Santander -6% ⁵
Knight Frank +2%⁶
House prices have risen since the end of the first lockdown but experts are split on whether this will last.
Some believe house price growth could slow down once the government’s coronavirus financial support schemes and the stamp duty holiday both come to an end.
Research by Which?⁷ found that:
Halifax says the housing market will eventually feel the effects of the economic downturn, with ‘greater downward pressure on house prices in the medium-term’.
Nationwide says the winding down of government support schemes could ‘dampen housing activity’.
Rightmove says the market is likely to continue performing well in the short-term, but buyers and sellers ‘still need to be mindful of the wider economic concerns’.
Zoopla believes that growth may slow down in 2021, but says it doesn’t expect house prices to fall before the end of next year.
The Centre for Economics and Business Research (CEBR) predicts house prices could fall by 14% in 2021.
Learn more about house prices and the coronavirus.
According to Halifax, house prices in October were 0.3% higher than in September, and 7.5% higher than October 2019.
This is the strongest growth since June 2016 when the Brexit vote took place.⁸
Russell Galley, Halifax managing director, said: ‘The average UK house price now tops a quarter of a million pounds (£250,457) for the first time in history, as annual house price inflation rose to 7.5% in October, its highest rate since mid-2016.
'Underlying the pace of recent price growth in the market is the 5.3% gain over the past four months, the strongest since 2006. However, month-on-month price growth slowed considerably, down to just 0.3% compared to 1.5% in September.
‘Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses. Since March flat prices are up by 2.0% compared to a 6.0% increase for a typical detached property. In cash terms that equates to a £2,883 increase for flats compared to a £27,371 rise for detached houses.
'This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.’
The Bank of England is predicting that the coronavirus crisis will push the UK economy into its deepest recession in 300 years.⁹
So it’s unlikely that buyers will be happy to pay pre-lockdown prices.
There may be a brief window of opportunity for those after a bargain as some 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 products they had withdrawn from the market during lockdown.
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.⁸
From April 2015 to April 2016 1,328,510 residential properties changed hands.
This fell to 1,189,540 in 2018/2019.
Transactions stood at 98,010 in September 2020, 0.7% lower than September 2019.
But they’re nearly 50% higher than May 2020 (45,900 transactions).¹⁰
The rise since May is due to lockdown restrictions being eased.
Are fewer people looking to buy since Brexit
The number of potential buyers has risen 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.
Numbers rose to 379 in June 2020, 428 in July 2020, fell to 396 in August 2020, and then rose to 525 in September 2020. This is the highest number of house hunters recorded since June 2004, when 581 were recorded per branch.¹¹
Should I remortgage because of Brexit
Remortgaging has been attractive for homeowners for some time because of competitive rates.
Looking at buyer habits, Brexit may have been causing more people to take out a fixed rate mortgage. This is so they have some certainty while so many things are up in the air.
Approvals of loans secured on properties for remortgaging fell to about 33,400 in August, down from 53,061 in February. They fell again in September to 32,700¹³
This is probably due to delays in the mortgage market caused by the coronavirus, rather than Brexit. For example, some lenders are reluctant to lend to furloughed borrowers at the moment.
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 mortgage 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.'
¹ ONS UK House Price Index: July 2020
² Buy Association: UK housing market predictions: What to expect in the 12 months ahead
³ Real Homes: House Prices: all you need to know in 2020
⁴ The Times: Lloyds says house prices could fall by nearly 10%
⁵ City AM: How badly will coronavirus hit UK house prices in 2020?
⁶ Knight Frank: UK Residential Market Forecast
⁷ Which?: How is coronavirus affecting house prices?
⁸ Halifax: House Price Index
⁹ Financial Times: BoE warns UK set to enter worst recession for 300 years
¹⁰ HMRC: Monthly property transactions completed in the UK with value of £40,000 or above
¹¹ NAEA Propertymark: Housing Report, August 2020
¹² Bank of England: IUMBV34
¹³ Trading Economics: United Kingdom Mortgage Approvals 2020 data
Get a mortgage with Trussle today
Voted the UK's best mortgage broker
Advice in under 24 hours and a mortgage decision in 5 days, or we'll pay you £100 (terms and conditions apply)
100% fee free advice
5-star Trustpilot rating from over 4,400 reviews
12,000 mortgage deals from 90 lenders
Skip the paperwork: apply online any time
Free mortgage monitoring: we'll tell you when it's time to remortgage
Your home could be repossessed if you don't keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Terms and conditions apply for Trussle's Speed Promise.