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Brexit uncertainty could be hurting mortgage brokers too – Bamford

by: Pad Bamford, business development director at AmTrust Mortgage and Credit
  • 22/09/2017
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Brexit uncertainty could be hurting mortgage brokers too – Bamford
It feels like the countdown to Brexit has now really begun as negotiations between the UK government and the EU begin to take on a more deep and meaningful stage and with Theresa May making a landmark speech later today.

That said, how much actual progress is being made remains to be seen; certainly, from Michel Barnier’s public utterances we might be led to believe that the answer is not much.

How much of this is gamesmanship or brinkmanship is another question entirely. What we do know is that at some point the real negotiation has to begin, and there needs to be agreement from both parties on some major issues before the minutiae of the UK leaving the EU can be undertaken.

It’s apparent what those major issues are – the divorce settlement, the situation for EU nationals living in the UK (and vice versa), and the border between Northern Ireland and the Republic. Until we get a solution in these key areas we are likely to see more public statements around a lack of progress from both sides.

 

Affecting business

That middle issue is, understandably, a big one and may well be affecting mortgage advisers’ business if they conduct a significant amount of business with EU nationals in the UK.

As one adviser wrote in these very pages, uncertainty breeds inactivity and when you are unsure about how your status might be changed in the course of these negotiations, it’s unlikely you’re going to commit to purchasing in a country which may well ask you to leave in the near future.

Now common sense would seem to dictate that there can be a reciprocal agreement put in place which secures the status of EU nationals here and UK nationals in EU countries, but I think we’re all aware that this may come with some notable caveats, not least the EU wanting freedom of movement. A situation which doesn’t appear to chime with leaving the EU, and one Leave advocates would almost certainly rail against.

This may lead us back to square one, and without doubt gives many EU nationals living in the UK cause to rethink any plans they might have to purchase here and put down sufficient roots.

And, of course, it’s not just those in such situations who may be rethinking their future actions or wanting greater clarity before making what tends to be the largest of all commitments, purchasing a home.

 

Public pause

With the negotiations lasting for the next two years and the true result not being fully formed until 2019 at the very earliest, it would not be surprising to see many more potential, and existing, homeowners putting their plans to purchase or remortgage on hold while they wait to see how the environment changes.

Indeed, as has been recently pointed out, it’s not even the Brexit negotiations that might give the public cause to hold their cards close to their chest.

In November chancellor Philip Hammond will deliver a Budget and there are whisperings that he might wish to relook at Stamp Duty thresholds, with the potential for some giveaways in this area.

If you’re a first-time buyer on the verge of purchasing, might you not wait until November to see if you can make a saving on Stamp Duty rather than paying thousands of pounds now? Given the money required to purchase in today’s market, and the difficulties many first-timers have in pulling the deposit together, I think we’re all acutely aware of the difference this saving could potentially make to their situation.

So, while we await the Budget, and as the EU negotiations progress, advisers might find their client base wanting to hold fire until there are more answers than questions. Uncertainty pervades at the moment and the profession might find itself waiting on some tangible facts before clients are willing to commit.

The important point will be that, when they’re ready to act, you are the ones who can provide them with the financial and mortgage facts that allow them to proceed.

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