The news that the UK has a new deadline to leave the European Union by 31 October means that the likelihood of leaving under a no deal situation has decreased.
Curious as to what this maximum extension of six months could mean for the mortgage industry, we approached some key voices to get their opinion.
Intrinsic mortgage advice network managing director Gemma Harle says that it “will come as no surprise to many advisers.
“Unfortunately,” she continues, “the added uncertainty piled on by a delay of this length will come as bad news to some advisers who have reported a slowdown in new business as a result of people simply staying put in their houses until they see how this political situation plays out.
“However, the mortgage market is resilient and a drop in house prices because of the ongoing uncertainty does still open the door to some new applicants who might have previously been priced out.”
Harle adds that with things still unclear, she does not expect the housing market to rebound to any great extent, but concludes that “advisers should seek solace in the fact that a longer extension reduces the chances of the UK crashing out of the EU and the consequences that could have on the housing and mortgage market.
“Similarly, a longer extension may also mean that potential house buyers might decide that they simply need to get on with their plans and not wait around for our future relationship with the EU to become clearer,” she says.
Yomdel founder and chief executive Andy Soloman also sees subdued activity in the market: “Given the damage already sustained by the UK market as a result of political uncertainty, this latest extension could bring a further scare to UK homeowners, as the rate of house price growth looks set to remain stagnant until the end of October at least.
“A smoother exit would certainly be preferable and so if utilised properly, this extension could enable a quick return to form for the UK market in the long-run. In the short-term expect more lethargy across the market, a continued adjustment in asking price expectations, flat levels of transaction growth and erratic movement in sold prices.”
Coreco director Andrew Montlake takes a more positive stance: “That the new proposed end date for the ongoing Brexit nightmare is Halloween is proof positive that Hollywood is writing the UK’s political script,” he says.
“The latest delay is not long enough for some and short enough for others, but for the UK property market the bleak drama playing out in Westminster is becoming less and less relevant.
“With both the global financial crisis and Brexit under their belts, many prospective buyers and sellers are accustomed to chaos and are increasingly getting on with their lives.
“Over the past month or two, we have seen a marked pick-up in activity levels. More and more buyers are realising that the current market volatility is their trump card and they are playing it accordingly.”
Reapit chief executive Gary Barker also sees reasons to be cheerful: “In the short term, the market should not be significantly impacted by the Brexit delay. In fact, we expect activity to pick up in the coming months, as buyers and sellers tire of waiting for a resolution – particularly, first-time buyers who may come to the conclusion that now is the best time to buy.
“Market activity will increase more rapidly once Brexit negotiations have concluded, as consumer confidence rises. Estate agents need to be prepared for when the floodgates open,” he says.
MT Finance director Joshua Elash, however, is quite firm in seeing this as a negative move: “While we recognise that this is a temporary compromise to a complicated situation, we do not welcome the extended nature of the delay and the consequential, continued, uncertainty it will entail.
“The market will now stagnate through the summer and potentially into the autumn. We only hope that the time is used effectively and that we leave earlier than October with a clear and agreed deal. I suspect, however, that this will go the distance. Again.”
Lentune Mortgage Consultancy managing director Stuart Gregory concludes that “a Brexit extension does lead to more market uncertainty, but this has now become normal for mortgage brokers.
“More clients will, I feel continue with their plans, as they push past the political impasse to move on with their lives. Brokers will continue to adapt and provide solutions.”
Whether or not the UK housing market is set to bounce once Brexit does happen was tackled in our most recent Head to Head article.