But could those consequences be a blessing in disguise for UK home buyers?
At the time of writing, the post-referendum ‘resolve’ had just been announced and after the initial expected market fluctuations, British consumers may stand to benefit from its position as an economy outside the euro and one with political stability.
Experts are certainly bullish about the prospects for the UK mortgage market, arguing that most lenders are well-funded and any instability has already been priced in. As a consequence, I don’t expect much of an impact on the domestic market.
Without wishing to appear to be underestimating the extent of the problems Greece is facing, we have been aware of them for some time now and knew well in advance that we would have to deal with them. It was just a question of when.
Like many observers, I believe it is more a bump in the road than a complete derailment. Greece’s liquidity problems have certainly rattled the markets, but they could, perversely, make gilt yields - and therefore mortgage costs - fall.
Adding fuel to that argument is the fact that gilt yields have moved up about 50 basis pointsover the last three months, but mortgage fixed rates have come down. Admittedly, some lenders have put up rates, but the overall the trend has still been down. That suggests lenders feel they need to compete more following poor lending figures in the first half of 2015.
Working in consumers’ favour is that the UK has become something of a safe haven to park money in these uncertain times. That could precipitate a fresh wave of very competitively-priced loans from the Funding for Lending Scheme, if the mortgage market needs it.
When introduced, itgave lenders access to funds that provided a buffer against the uncertainty of the crisis and the rising cost of funds.
Banks in the UK have little exposure to Greece. According to datastream, domestic banks have just £7.5bn ‘at risk’: just 0.4 per cent of GDP. To put this in context, Barclays alone has a balance sheet of approximately £1.3trn.
However, the fact that the Greece ‘no’ vote for further austerity has transformed into a ’yes’ for another bail out almost certainly means we will have to wait a while until market conditions stabilise until we know which way rates will go – if they change at all. From August however, things are likely to have firmed-up and we will knowhow much of a drama the Greek tragedy turned out to be.
