What will happen to the mortgage market if we leave the EU ...???

By James Mcgregor on Aug 16, 2017

After recently going through MMR and now abiding to a lot of EU rules which has caused heightened regulation and caused frustration across the industry. 

The question now comes down to, what will happen if we leave the EU?

First of all let me put my opinion out there so people do not think this is coming from a biased point of view. I have not yet decided what I am going to vote and feel that both parties campaigns are at best embarrassing. So now back to if we leave. The financial markets have slowly been making a recovery from the crash back in 2008 and it is showing in the mortgage market. Numerous new lenders have come in to the market over the last couple of years and lending figures are stronger year on year. Lower deposits are now required and in my opinion lending is at its easiest now than it has been since 2007 and before.

I had a conversation with a senior accountant the other day who made the point 'don't you think the banks already know what will happen and have hedged their funds'. This made me think, yes this is a very valid point. The banks have not changed anything in the lead up to the 'Brexit' vote so I believe the banks are hedging that we will remain. I believe if we was to leave the EU we will see very similar behaviour to what happened in 2008 from the banks. They will tighten up their lending policies, as a lot of investment will immediately leave the country. I believe this will take around 2-3 years to recover as well back to the levels of lending that the UK is doing currently. The main reason for this is the banks will want to see how not only the UK economy reacts, but also the global economy reacts. They would not want to put themselves in a position where the Stirling business loses 25% over night, yet they have a huge debt book. This could potentially leave a lot of the banks with even larger deficits than they already have.

Don't get me wrong, I am not saying countries will stop trading with the UK or it will be a long term hell that we will never recover from. I am merely saying that if we do vote leave, it will not be as easy as it is today to borrow money from the banks. This could have a larger effect on a lot of the country than people may think as well, as lets be honest we now live in an economy fuelled by debt.

Please put your thoughts down in the comments or any questions at james@mesafc.co.uk

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