The Brexit withdrawal agreement became reality on the 24th of January 2020. There is no dramatic and immediate change starting February 1st this year. On the other hand, it is clear that the departure will generate effects for the economy. Experts are cautious in offering estimates. Let’s face it, neither wishful thinking nor panic-mongering will help anyone.

What we can do is to examine the current situation and make educated guesses. The syndicated loan market is a significant issue, affecting tens of millions of people in the U.K. Today, we will look at such data and predictions.

The Loan Market in the U.K. Has Been on the Rise Since 2008

The global economic crisis of 2008 had adverse effects on the U.K. population, with significant decreases in consumer income. In turn, this situation led to substantial growth in the loan market. Households needed financial instruments to cover their expenditures and even debt.

Things have improved since then, and the loan market in the U.K. is a booming industry. Or was, at least a few years back. According to reports, consumer lending (without student loans) in the U.K. amounts to about 70 billion British pounds. Think personal loans, overdrafts, and other types of credit. As of the 3rd quarter of 2019, the gross mortgage lending value in the U.K. reached an approximate threshold of 70 billion British pounds.

Studies show that more than 60% of U.K. market participants hold one form or another of loans and credit products. The most owed money in the U.K. comes from credit card debt, followed by account overdrafts and personal loans.

Consumer reports estimated that London homes carried higher personal loans than the rest of the country.

It makes sense to wonder how the Brexit deal will change things. Let’s talk about personal loans, payday loans, and other similar financial instruments.

To Be or Not to Be… A Recession

Everyone expects some market/currency fluctuations post January 31st. But these are regular events. Experts do not fear they will have a significant impact upon the population. The U.K. will go through an 11-month transition period. Therefore, the full effects of Brexit will become more visible for the people starting 2021.

Nobody can say for sure if the U.K. goes through a recession in the aftermath of Brexit. If the country’s Gross Domestic Product drops, people will spend less money. Such behaviors lead to financial decline.

In times of recession, people may need to get out of financial pinches quickly. They may want to solve emergencies by taking more payday loans. They might consider personal loans for debt consolidation and significant expenses. On the one hand, lenders will have quite busy days in this case. The same applies to secondary loan markets which will be observing a boom. On the other, most lenders will most likely toughen up the application approval process.

Say you found the best loans provided by a certified lender. Specialists agree that you still need to do your homework. Even lending companies encourage clients to perform research. Those interested in borrowing money in the immediate future should learn more about the following:

terms and conditions,
approval times,
necessary credit scores for short-term loans and unsecured loans,
affordability checkups.

Brexit will generate change. It is for sure, even if it did not begin on Saturday morning. Since few of us aced the Divination class at Hogwarts, we cannot foresee the future. It is better to have a plan B and some safety nets ready. Just in case you need to make ends meet after February 1st.

The Cost of Life in the Post-Brexit Era

The cost of living is an issue that keeps experts on their toes. Until the U.K. prime minister closes on a Free Trade Agreement, the price of food, gas, electricity, and others might witness progressive increases.

There is no definitive information on the intention of the government bodies to lift fuel taxes. But a higher cost of living might determine citizens to rely more on personal loans or payday loans. They need to make it until the next salary or until the economic situation regains its balance. People should know that during unstable financial times, the spiral of debt could become problematic.

On the other hand, let’s hope the U.K. manages to secure successful and beneficial deals during this transition period. After 2021, the country might experience economic growth. Being able to spend more money determines people to focus more on personal loans for:

home improvement projects,
vacations,
new cars,
investments, and so on.

When the economy of a country is doing well, lenders relax their loan approval policies and check-ups.

Real Estate and Mortgage

Nobody knows for sure how things will go down in this department. While house prices have been tumbling for quite some time, U.K.’s real estate market is a puzzle game for many. However, experts report recoveries as of late. The house market became a buyer’s market. Yet, there are few buyers out there ready to commit.

When it comes to mortgages, inflation may become a huge problem. It can lead to direct interventions from the government to raise interest rates. If interest rates increase, your mortgage rates will go up (in case you do not benefit from fixed-rate deals). If interest rates fall, it means good news for people who consider a remortgage. Or who carry now variable interest rates.

The EU’s Mortgage Credit Directive (MCD) is a problem the post-Brexit government might want to change fast. It was one of the reasons listed in favor of the separation). Considered as a “mortgage prison,” the MCD might take a new shape. It can change the way we understand, access, and pay mortgage altogether.

Post-Brexit Preparations

Now that the European Parliament has approved Boris Johnson’s Brexit plan, it’s time to sit down and come up with a strategy. It’s better to act than be a victim of inflation.

If you have a savings account, you should hope for the Bank of England to increase the base interest rate so you can pile up better returns. Of course, the base rate might decrease, which means you will see your interest fall on both savings and loans.

You could also switch your mortgage to a fixed-rate variety to secure cheaper repayments. If the base rate goes down, those who keep variable rates might enjoy cheaper repayments. It is an advantage that the borrowers with fixed rates won’t enjoy.

How do you feel about your finances and loans starting February this year? Do you feel ready to adapt to the challenges in front of us? Do you think the UK’s economic landscape will differ from loan markets in Europe?