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Mortgage

The real meaning of Brexit for home movers

Last month, we saw a rise in UK mortgage lending, according to Bank of England data, that highlighted a movement in housing market waters that many might have believed were beginning to stagnate.

Homeowners and home buyers in April had put aside any Brexit-related uncertainty and helped British banks approve the greatest number of mortgages since February 2017.

Net mortgage lending came in at £4.3 billion in April, slightly higher than the average of £3.8 billion seen over the previous six months.

The increase was primarily driven by mortgage approvals for house purchase, often a guide to the trend in lending going forwards.

Many commentators were quick to suggest this new impetus to buyer confidence was boosted by the delay to Brexit, which spared Britain an imminent no-deal departure from the European Union.

The rise in mortgage approvals was proof for some that housing market activity got some temporary support from the avoidance of a disruptive Brexit that was originally time-tabled for the end of March.

I’m not so sure. Brexit has over the last three years become part of national economic fabric and, with little sign or hope of anything being settled imminently, some home buyers and remortgagors appear to have taken the decision to just ‘get on with life’. We know home moving is very often driven by life events and these do not come to halt for political reasons.

These figures do not represent a new found sense of euphoria in our housing market. The data also suggested ongoing caution: April’s monthly increase of £0.9 billion in consumer credit was in line with the average since last summer, but the annual growth rate slowed to 5.9%, while new credit card lending fell for a second consecutive month.

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Where the market goes from here is no more certain than before these numbers but what we can conclude is that consumers often have to get on with things. The resignation of Prime Minister

Theresa May and the ensuing contest for a new leader may heighten the uncertainty hanging over the economy but the other fundamentals are not set to change in hurry. Any new leader too will face the same maths in Parliament – whatever Brexit option they pursue.

If this continues we will see this feed into house prices but it is too early as yet to see change there. House prices are continuing to grow at an annual rate of less than 1%, according to the Nationwide Building Society.

What these figures do illustrate is that Brexit in itself is not the sole driver of home buyer behaviour. If people need to move, they will. Brexit may not make home moving easy but it is far from bringing it to a halt.

Source: Mortgage Finance Gazzette

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