politics

How the Brexit deal is likely to affect house prices in 2021


After drawn-out negotiations and multiple missed-deadlines, the UK has finally agreed a Brexit trade deal with the EU.

Prime Minister Boris Johnson and President of the European Commission Ursula von der Leyen concluded talks on Christmas Eve, just a week before the transition period will come to an end.

They have reached a historic agreement that will replicate many – although not all – of the economic benefits enjoyed by EU members.

The deal now has to be ratified by UK MPs, who are expected to vote some time next week.

Crashing out of the transition period without a deal would have seriously impacted the UK economy, with knock-on effects to unemployment, food prices, the housing market and more.

The certainty of a deal offers more stability – but that’s not to say financial markets will be entirely unaffected. Here’s what we can expect:

How will Brexit affect house prices?

This trade deal has extinguished fears of a no-deal Brexit crashing house prices, and short-term disruption will most likely be avoided.



A young couple receive the keys to their new home
There were fears a no-deal Brexit would crash the housing market in 2021

This is good news for potential buyers and sellers, who are already facing a turbulent housing market.

The government’s stamp duty holiday expires in March 2021, and then the furlough scheme will wrap up just a month later.

This is expected to lead to peak unemployment, and a subsequent downturn in house prices.

But nothing is certain. Some experts believe the roll-out of the Covid vaccine will give people more confidence that life is returning to normal, making them more likely to make large investments.

Will Brexit affect mortgage rates?

Mortgage lenders typically use the Bank of England’s base rate (its official borrowing rate) to determine how much interest they charge on a mortgage.

Due to the coronavirus pandemic, the Bank of England’s base rate is currently just 0.1%.

If Brexit causes the pound to drop the BoE may decide to hike the base rate, which would increase the interest you pay on your mortgage.

But in the context of a global pandemic, they’re unlikely to do this.





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