View more on these topics

Brexit and inflation to chill 2018 mortgage market: EY


Brexit and inflation will cool the 2018 mortgage market, according to EY.

UK mortgage stock will hit £1.19trn in 2017, dip to £1.18trn in 2018 and rise to £1.2trn by 2020, EY says in its latest outlook for UK financial services.

The City is also set to suffer a slowdown next year, EY warns.

EY thinks business lending is predicted to stagnate in 2018 and 2019 before slowly climbing to £435bn by 2020.

However, with inflation set to hit 3 per cent later in the year while real household incomes forecast to decline by 0.2 per cent, demand for consumer credit could rise if households attempt to compensate for the hit by borrowing more.

EY forecasts consumer loans will grow from £204bn in 2017 to £218bn in 2020.

EY’s UK financial services managing partner Omar Ali says: “Even modelling for a Brexit transitional deal, the outlook for 2018 remains tough for financial services as the impact of higher inflation is felt by households up and down the country. Business lending, mortgage lending and general insurance look set to be the hardest hit.

“Despite warnings from the Bank of England and some high-street lenders, the only type of lending that is expected to grow in 2018 is consumer credit.

“A return to mortgage and business lending growth is forecast for the latter stages of the decade, but this does depend on the right deal being struck with Europe.” 



Brexit to raise banks’ costs by 4%, report finds

Banks will have to raise their capital by up to 30 per cent and bear an additional 4 per cent in costs due to Brexit, a new report finds. Consultancy Oliver Wyman warns that preparing for a hard Brexit will cause large European banks to duplicate resources and capital. HSBC recently estimated that immediate Brexit […]


FCA spends £2.5m on Brexit lawyers

The team of Brexit lawyers hired by the FCA will cost almost all of the £2.5m the regulator has said it must raise to prepare for the UK’s exit from the EU. Earlier this month, FCA chief executive Andrew Bailey said the regulator has hired 15 extra lawyers to help with the technical work involved […]


FCA boss: Brexit not bad news for financial services

Brexit will not necessarily be bad news for UK financial services, according to FCA chief executive Andrew Bailey. In a speech this morning at a Thomson Reuters event, Bailey said some Brexit talk was too pessimistic about trade restrictions, where firms are based and the future of open markets. He says: “Does Brexit have to […]

'Feeling the Squeeze'

Royal London carried out a UK wide survey with 2,500 consumers age 35-44 over the summer. The survey found that over a third, 34 per cent, said their finances felt Squeezed and so were struggling to meet day-to-day expenses, despite 87 per cent being aware that they need to save more. However, the survey did […]


News and expert analysis straight to your inbox

Sign up