George Osborne has warned UK citizens that mortgage rates are likely to rise if the June referendum results in Britain’s exit from the EU.
According to the Chancellor, leaving the EU is likely to result in interest rates increasing, which will have a huge impact on the cost of home loans. However, campaigners for Brexit have stated that they believe Osborne is trying to intimidate voters and is panicking. He stated that leaving the EU could result in the value of sterling falling, which would push up the price of imports. To prevent inflation from soaring, the Monetary Policy Committee would have to raise interest rates from their historical low of 0.5%.
The chief executive of Vote Leave, the official ‘leave the EU’ campaign, Matthew Elliott, said:
“Less than 24 hours in and the pro-EU camp are already panicking – resorting to doing down the economy and people’s mortgages to intimidate the British public into voting their way.”
A survey conducted by Reuters found that 17 city economists out of 26 believe that a Brexit vote could result in the Bank of England reducing interest rates. Osborne responded by labelling this as “project fantasy”.
As it remains unclear how interest rates, and therefore the cost of home loans, would be affected by leaving the European Union, it is perhaps wise for homeowners to consider how they can prepare for an interest rate increase. Seeking advice from a mortgage adviser who has had CeMAP training is advisable for borrowers.
