It’s done: The citizens of Britain voted in a historic referendum to give up her membership in the European Union. Putting aside all of the implications to Britain and her peoples on a national level, what most are asking is how this move is going to impact their family’s finances.
The markets reacted initially with a substantial drop in the pound against the U.S. dollar. London’s leading stock market tumbled rapidly. This is important information to have but what most of us really want to know is this: how is Brexit going to impact my family’s finances?
Should I worry about my mortgage?
Those who closely follow all things financial are speculating that the Bank of England may make some changes in the coming weeks. The Bank is expected to possibly cut interest rates as a way to boost markets.
Banks could become hesitant in their lending practices on at least a short-term basis, so we could see mortgage costs start to rise. Homeowners are encouraged to discuss fixing their mortgage rates if they can. Fixing mortgage rates while they are at lower levels is highly recommended.
The Government will do what it can to keep interest rates down in the months immediately following Brexit. This will be an effort to help the economy deal with the shock of the coming changes. Interest rates will eventually rise, however, as a countermeasure to anticipated inflation. All of this means that higher mortgage rates will be coming.
What’s going to happen with petrol prices?
There could be a rise in the cost of petrol in the short term, according to motoring organisations. Some volatility in the price of fuel is to be expected in the wake of Brexit. The drop in the value of the pound leaves retailers to face an increase in their wholesale prices for product.
Because the price of oil is quoted in U.S. dollars, a decrease in the strength of the pound would mean an increase in the cost of fuel. These cost increases will likely be passed on at the pump.
Will my household bills be impacted?
One of the top concerns post-Brexit vote is how will our household bills be affected. Many have voiced concerns that a whole range of household bills will be going up.
Wholesale gas and the cost of electricity are directly related to the price of oil. If the currency markets fall into disarray, there could be an immediate rise in energy bills across the board. There could also be an increase in fuel duty and income tax in the aftermath of the vote to increase the readily available cash in the State’s coffers.
Is my pension in danger?
State pension values are protected by what’s commonly called the triple lock. This effectively locks in one of three scenarios, depending on which is highest. Either the annual increase in the state pension is 2.5 percent or it must match the rate of inflation as reported by the Retail Prices Index. Or it could be compared to the increase in average earnings, if that is the highest rate of the three.
No one can predict with absolute certainty what is going to happen after the Brexit vote. What we can predict is that it should prove interesting, at least.
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