Since the vote to leave the EU on 23rd June 2016, there have been many articles both positive and negative about the effects of the result on different aspects of our lives. From the wider financial economy to unsecured loans rates, debates are still on-going. However we are now living out some of those debated topics, so are we in a Brexit turmoil?
An immediate reaction to Brexit was a cut in the Bank of England base rate which was already at a low 0.5%. But now the Bank of England base rate continues to be at a record low of 0.25%, and so interest rates remain highly competitive which impacts upon our borrowing. Unsecured loan and mortgage rates are at the lowest for years and there has never been a better time to borrow. However Bank of England Governor Mark Carney hints of a rate rise has speculators claiming that as of November 2017 the base rate may increase to 0.5%, so it is wise to consider when setting household budgets. Mortgages are more directly affected by any base rate change as opposed to a loan product, can you afford an increase in your mortgage repayments every month?. Lenders do consider the base rate when offering their loan products but it isnt necessarily directly affected by any base rate change.
A direct response to low mortgage and favourable borrowing rates is evident in the housing market. Recent reports suggest that prices in London have actually started to fall, even in wealthy boroughs such a Kensington and Chelsea. Indeed the London Standard reported “that more than a third of homes for sale in London have had their asking prices slashed as the suburbs bear the brunt of a post-Brexit property crunch. Estate agents are offering discounts on almost half of properties in some outer boroughs, new figures show. A total of 36.6 per cent of homes for sale in London had their asking price reduced in the last five months, according to property website Zoopla. The average discounted property is on the market for £52,457 less than it was priced at in March 2017 — a drop of 7.2 per cent.” However, the rest of the country does not appear to be following suit, which led some to believe that wealthy London buyers are merely waiting until after Article 50 negotiations.
Perhaps the biggest impact on peoples’ daily lives however has been in the cost of living. The prices at the supermarkets have gone up and this is felt by everyone. A weaker pound v the Euro and dollar, has meant that many food importers/suppliers/retailers have passed the increases onto the consumer. In the first instance retailers absorbed the costs. The much publicised stand off by Tesco against Unilever as to who would be responsible for a price increase due to the weaker pound, saw Marmite temporarily withdrawn from the shelves. It could be argued that not all food price increases are linked to Brexit, but according to the National Farmers Union (NFU), only 15% of the fresh fruit sold in the UK and 55% of the vegetables are home grown. The rest, including citrus and soft fruits, comes from the EU. Pork is another foodstuff likely to be heavily affected, as nearly 40% sold in the UK comes from overseas.