Upsizers could have lower mortgage rates
A silver lining for homeowners is that your mortgage rate could stay low for longer. In March, the Bank of England dropped the Base Rate to a record low of 0.1pc to boost the economy. The added economic uncertainty brought on by a no-deal Brexit would make raising the rate soon even more unlikely.
Financing loans will therefore stay cheap for homeowners and upsizers. But the market will polarise: the longer the economy, job security and the house price outlook are unstable, the more reluctant lenders will be to offer mortgages to buyers with lower incomes and smaller deposits.
Already, lenders have almost entirely withdrawn mortgages for buyers with 5pc and 10pc deposits and introduced tight restrictions for buyers without large cash stores.
Nationwide has announced it will only lend to buyers with 10pc deposits if they have saved 75pc of it themselves. Barclays has reduced the borrowing capacity of its customers from 5.5 times their income to 4.49.
The uncertainty that would stem from a no-deal Brexit would only compound this trend, said Mr Sykes. Mortgages for buyers will deposits smaller than 20pc will become even more expensive as lenders increase their profit margins to account for the risk, he added.
At the same time, lower risk mortgages will likely become a key battleground for lenders, said Mr Sykes. They are likely to offer lower rates on longer terms to buyers with large deposits. Anyone with cash or significant equity in their homes will win out.
Jonathan Harris of Forensic Property Finance, a mortgage broker, said: “I do think the wealthy divide will only increase.”
What about my holiday home?
One group that could be rubbing their hands at the prospect of a no-deal Brexit are those who own property overseas, particularly in the EU.
No-deal would likely trigger a drop in the pound. Second homeowners with properties on the Continent who are selling in euros could therefore see the sterling value of their assets rise.
Currency play could have big implications at home too. “Logic suggests that a fall in sterling would bring an uptick in overseas buyers,” said Mr Harris. This would primarily benefit the London market which has a higher concentration of international purchasers than the rest of the country.
Overseas buyers could be further spurred by the imminent end of the current stamp duty holiday on March 31, and the introduction of a two percentage point stamp duty surcharge for foreign buyers, due to be introduced in April.
Any increase in demand from foreign buyers, however, will be dependent on the situation with travel restrictions, said Mr Harris. If there is a second national lockdown, a surge is unlikely.
If there is a rush, the boost by the drop in sterling could be undone by the tax changes. International buyer numbers are likely to drop after the surcharge is introduced.