Article 50, the starting gun for the UK to leave the European Union was triggered on the 29th March and now the UK property market braces itself to see how it will be affected, both in the short and long term, by Britain's decision to withdraw from the EU.
What happens next?
Lucian Cook, the director of residential research at global estate agency Savills, says: “The triggering of Article 50 has been pretty well telegraphed, so for the housing market, it’s more about how the subsequent negotiations go and what that does to buyer and seller sentiment.
“If the EU is open to constructive negotiations, the impact on sentiment will be limited to mild caution, whereas a more combative stance risks restricting activity to buyers and sellers who really need to move.”
He predicts that buyers will be most cautious in London, given that buying a home in the capital is a bigger financial commitment than elsewhere in the country. Mr Cook predicts that values there will “pretty much flatline for a couple of years”.
A recent report from JLL suggests that the North, specifically the North West has been and will be a lot more resilient to any slowdown, with strong growth figures expected in both house prices and rental yields.
What about the mortgage market?
The market so far has been largely unmoved by Brexit. Lenders have continued to drop interest rates across the board since last summer which indicates a lack of concern currently.
There seems to still be a large appetite for banks to lend. The rates are very competitive and there are still plenty of high loan-to-value mortgages available to consumers.
If anything is to bring this to halt then it would be the Bank of England base rate rising. If the bank were to raise rates from 0.25 per cent to 0.5 per cent, the impact would be greater than just a rise in mortgage repayment, because inevitably confidence will take a hit. Yet so far, there have not been any firm indications that this is the way the Bank of England wants things to go.
Many lenders are now looking at ways they can get borrowers to borrow for longer and into retirement and encouraging them to release the often large amounts of equity they are sitting on. One would expect this to be a good thing for the older consumer and help to keep the market moving in the right direction.
If you haven't done so yet, it's a great time to lock in a new mortgage rate for the next few years and make the most of the historically low base rate.
Paul Mahoney is the founder of Nova.Financial.