As FT readers digest the Brexit vote, their thoughts have naturally turned to what the referendum means for their personal finances. We asked readers to tell us about the issues that were most troubling them, and put the most common concerns to experts.
If you have a Brexit financial query of your own, comment below, or use this private form.
My husband and I have been planning to buy a property in London. Should we wait a few more months to see if house prices drop?
Even before the Brexit vote, the London market was slowing, with prices for the most expensive central London homes down by 8 per cent since mid-2014, according to estate agent Savills.
That trend is not likely to change, says Richard Donnell, research director at housing market analyst Hometrack, but you shouldn’t expect a bargain if you wait.
“Greater uncertainty will take the heat out the price rises and reduce the level of demand,” he says. “The problem is there are unlikely to be many forced sellers who will take a big discount but those looking to sell will be more open to offers.”
The type of homes that attract investors are more likely to fall in price in the face of tax changes and uncertainty — but family housing will remain in demand. “If your dream home comes on the market next weekend, don’t wait. By the time you get to exchange the outlook will hopefully become clearer.”
We own a buy-to-let property. Our two-year fixed term mortgage ends in August. With equity of about 60 per cent, we hope to secure a fixed-term deal for five years at a lower rate. Are cheap mortgages likely to continue being available?
One of the silver linings of Brexit — for now — is that mortgage rates remain very competitive as Bank of England base rates are expected to spend even longer at their historic lows and may even fall. Lenders are therefore vying to win customers with cheaper rates and lower fees.
Aaron Strutt, product director at mortgage broker Trinity Financial, says there are some attractive five-year fixed-rate deals available below 3 per cent if you are looking for long-term security on mortgage repayments.
But the first step, he says, is to call your existing lender and ask them what they will offer you to stay. “As you are at low loan-to-value, you should have the pick of any existing customer rates. As your rate is about to expire you may well have a period on the standard variable rate if you decide to shop around and remortgage to another lender,” he says.
Should I convert my sterling-denominated savings into another currency?
Having seen the value of the pound plunge since the vote, many readers worry that it will be vulnerable to further shocks in the months and years ahead. Grant Lewis, of Daiwa Securities, observes that the pound recovered from an initial drop when Britain fell out of the European Exchange Rate mechanism in 1992. He adds, however, that: “the trough (which was around 30 cents lower than where the initial rally occurred) was not reached until five months later”.
This does not mean the average British saver should be purchasing dollars. Those who live and plan to retire in Britain will mostly be buying sterling-denominated goods and assets.
For people interested in currency investment, however, John Woods, the chief investment officer at Credit Suisse, believes south-east Asian currencies could benefit if Brexit fallout slows the global economy.
Mr Woods argues the US central bank may lower interest rates to contain any damage. That could reverse the trend of traders selling out of the currencies of Indonesia, Malaysia and Thailand as US interest rates rose, believing this made the higher-risk returns of emerging markets less attractive.
“Lower for longer US rates would ease pressure on south-east Asian currencies and provide room for policy easing,” Mr Woods says.
Is it likely that the state pension will no longer be uprated for pensioners living in the EU?
Hundreds of thousands of Brits who have retired in the eurozone are at risk of losing the inflation proofing on their state pension following Brexit.
Under existing rules, anyone who retires to a country within the European Economic Area has their state pension uprated by the “triple lock”, which sees the state pension rise each year by the highest of consumer price inflation (CPI), average earnings or 2.5 per cent.
This uprating for expats is made possible by EU regulations so there is no certainty that it would continue after Brexit, when the UK is no longer bound by Brussels.
There is also a wider question mark over the triple lock itself. Before the referendum, David Cameron, prime minister, warned that “special protection” for the policy would be under threat if there were a “big black hole” in the economy following a Brexit vote.
What asset classes can I invest in to shield my wealth from the impact of Brexit, and what should I avoid?
In the days since the referendum result, the more internationally focused FTSE 100 has bounced back, whereas the more domestically focused FTSE 250 index has struggled to regain losses.
UK banks, housebuilders and retailers were among the hardest hit, but in the week following the vote 100 company directors in the FTSE 100 and FTSE 250 bought shares worth £14.3m.
However, financial advisers and wealth managers have warned investors not to move their portfolio around too much amid the current market volatility.
Too much money in any single asset class would be a bad idea at the moment, said Darius McDermott, adviser at Chelsea Financial, but short-duration bonds, cash and absolute return funds might be a good idea.
If you have stocks in your portfolio, be aware of the differences in performance between the two FTSE indices.
“Big bets could pay off, but if preserving capital is your remit, don’t get carried away by short-term market euphoria,” warns Mr McDermott.
Rash readjustments to portfolios bring the danger of exposing yourself to other risks. “We mustn’t lose sight of the risk of a lancing of the Chinese credit bubble or a sharp devaluation of the yuan, nor indeed the ramifications of a Trump victory,” says Jason Hollands, managing director at Tilney Bestinvest.
If you do want to adjust, making sure your portfolio is well diversified geographically is key. Investing in overseas equities means your portfolio is less vulnerable to further declines in sterling, says Eric Lonergan, multi-asset fund manager at M&G Investments.
Reporting by Lilah Raptopoulos, Naomi Rovnick, Josephine Cumbo, James Pickford and Aime Williams