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First-time Buyer

Osborne warns Brexit could add £1,500 to mortgage costs

Hannah Uttley
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Hannah Uttley

Buyers could be set back an extra £1,500 in the event of a decision to leave the European Union on June 23, as Chancellor George Osborne claims mortgage prices will be sent soaring.

In fresh analysis of figures published by the Treasury in April, the Sunday Times reported that a Brexit scenario would pile on between £920 and £1,470 to the cost of a mortgage on an average home priced in £292,000, in March.

The analysis, carried out by Britain Stronger in Europe, suggested that first-time buyers, who pay an average of £220,000 for their first home, would be hit by rising annual mortgage costs of between £810 and £1,280, amounting to £70 to £105 per month.

Speaking the Sunday Times, Osborne said rising mortgage costs for fledgling buyers would outweigh the savings made from a predicted fall in house prices if the UK leaves the EU.

A report from the Financial Times also revealed that high street banks in the UK are preparing for an EU exit by training staff on how to ‘reassure’ customers asking about the impact on mortgage costs.

However, in an interview with the FT, Ray Boulger, senior technical manager at John Charcol, said he did not expect mortgage costs to be immediately hit by a ‘leave’ vote as it would take at least two years to fully leave the EU.

He added that higher value properties were most likely to be affected by Brexit, due to its reliance on overseas buyers.