Project fear ‘didn’t work’ – how Brexit failed to harm UK mortgages as Europeans struggle

Brexit: Barnier warns UK against questioning deal stance

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The Brexit vote remains a divisive issue and campaigners from both sides of the argument dramatically pushed their cause for years. Those who wanted the UK to remain in the European Union (EU) were often accused of exaggerating the potential negative consequences of leaving and recently, a key “remainer” said some of the predictions were a bit far-fetched or crossed a line.

In mid-June, Lord Stuart Rose, the former CEO of Marks and Spencer and chair of the Britain Stronger in Europe, was interviewed on ITV’s Tonight programme ahead of the fifth anniversary of the Brexit vote.

This interview was wide-ranging, but it centred around many of the regrets he had concerning how the remain campaign became “project fear” in many areas.

Lord Rose acknowledged concentrating the campaigning on a mainly economic basis was a regrettable move.

Lord Rose said at the time: “I do remember that, you know, people saying that we’ve really got to hit people on the financials.

“The argument has got to be about finances and ‘it’s the economy, stupid,’ going back to the Bill Clinton days or whatever it was. And I think that was a big mistake.

“It was quite clear that immigration was a big issue.

“It was quite clear that getting your kids into school was a big issue. It was quite clear that getting a house and into housing was a big issue.

“It was quite clear that access to the NHS was a big issue. And I don’t think people really took it seriously about ‘Oh, well. You are going to be worse off’”.

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In a revealing statement, Lord Rose acknowledged: “It was [project fear] and it didn’t work”.

In the lead up to the Brexit votes, many negative, almost apocalyptic, financial forecasts were made and British savers were warned everything from their taxes to pensions would be affected.

However, while the economic impacts of Brexit are still being evaluated, some of the worst predictions failed to materialize.

Nicola Schutrups, the Managing Director of The Mortgage Hut, reflected on some of these predictions and commented on how the mortgage and property market remained strong (for British people at least) despite the fears.

Ms Schutrups explained: “If we’re talking about the worst-case scenario of Brexit, if it had gone wrong, we would have seen a significant tightening of lending criteria.

“That would have meant the loan to values that people could borrow would have meant that they would require more deposit, the higher-loan mortgages would have come out of the market, interest rates would have been priced higher and/or the credit assessments that they do in the background, and the scoring that they use for that would have tightened.

“This would have meant that the lower rung of people that would qualify for a mortgage probably would have been cut out of the market, these are typically the most important cross section of the market, first time buyers with low deposits or slightly impaired credit, instead of homeowners with a lot of equity.

“However, generally, no, there has not been a massive change. We obviously saw Covid land almost straight after Brexit and so we did see tightening of criteria around Covid, where the market was maybe worried about declining property prices or higher default rates in the credit market. So, we did see tightening around there.”

Ms Schutrups concluded by examining how non-British people may be affected by Brexit going forward: “But when we talk about Brexit specifically, we’ve seen people who maybe had EU passports before, who were treated as if they were a British national for the purpose of mortgages to be able to get what they want, now being treated as a foreign national where they need certain visas or they need time left on their visas.

“So, if you are a British resident, maybe with an EU passport and you haven’t got settlement rights straight away, that makes it a bit more challenging. It is yet to be seen how the lenders will treat people when they come to re-mortgage if they do have an EU passport. We think they’ll probably treat them the same as if they were a British national as long as they have the settlement status. We still see some lenders willing to take Euros as income for the purpose of affordability in mortgages. So generally, we’ve seen lenders adapt and haven’t seen people excluded.

“Basically, if they’re a British national buying in the UK we haven’t seen a huge difference there, but if they are an EU national looking to buy, then there could be tighter restrictions, they might be excluded by some lenders, but generally there are still options available to them.

“We are still only a year post-Brexit and feeling the effects of the pandemic, so we could still be yet to see some of these effects.”

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