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According to the British Bankers Association chief executive Anthony Browne, the future of residential mortgage lending will be drastically changed for the worse if the major lenders were move their operations to outside of the UK.
Mr. Brown wrote in the Observer that most international lenders are deciding which operations to move outside of the UK and that they are on the cusp of making this decision. He also wrote that the smaller lenders could move before Christmas this year with the larger lenders soon to follow.
Association of Mortgage Intermediaries chief executive Robert Sinclair has also said that the current limits on trade borders with the EU would have a knock-on impact on the mortgage industry. Banks need to be able to trade cross border within Europe with no limitations and this has been integral to the mortgage industry and by leaving the EU this will be affected.
It’s not predicted that banks will leave the UK entirely, but many aspects of their operations will do so. Mr. Sinclair has stated that “The ability to trade capital, funding, swap and derivative products supports the wider world economy as well as our own” and that “ any threat to this risks limiting the ability of our largest UK Banks to support the domestic economy in the same way.“
Although we are unsure of when the UK will leave the EU, especially after this week’s news regarding Article 50, Mr. Sinclair says that we “cannot ignore the fact that changes to how these major banks operate has the potential to restrict the future funding of UK residential mortgage lending.”
Adam Tyler, Chief Executive of The National Association of Commercial Brokers believes that bridging the sector would be resilient in the case of lenders moving their operations to outside of the UK. He says “Bridging is a specialist sector that operates relatively independently of the major banking institutions, and if anything, the departure of big name banks could thrust alternative finance even further into the spotlight. It’s worth noting that the current bridging industry grew out of the ashes of the global financial crisis when many mainstream banks effectively shut up shop. In other words, any uncertainty on the high street often benefits the bridging sector as it becomes more visible and demand from borrowers increases.
Your home may be repossessed if you do not keep up repayments on your mortgage.
If you would like more information on how Brexit may affect you, please contact Derngate Wealth today.