Scottish homeowners have been warned that a “Yes” vote for independence on September 18th will mean that Scotland would possibly have to create a brand new currency. This would have dramatic consequences for their monthly mortgage repayments.
Although the terms and conditions would need to stay the same, regardless of the lender, the payments would need to be made in the new Scottish currency and would therefore be subject to Foreign exchange rates.
Based on the assumption that a new Scottish currency, if allowed to float freely on international money markets, would depreciate by around 10pc immediately against the pound, that could see the proportion of mortgage payments as a percentage of income in Scotland jump dramatically.
In the early days, it is expected that a new Scottish currency would certainly be weaker than sterling and longer-term interest rates in Scotland would have to be higher than in the UK.
Anyway, here’s the maths…… Experts say that a new currency is likely to fall in value by about 10% immediately against the pound. In that example, a Scottish homeowner with a £1,000 monthly mortgage payment would suddenly have to find an additional £100 overnight just to cover the short-term cost of buying sterling to make their payment.
Most mortgage lenders operating in Scotland are based in England, so UK rules apply. There are still a couple of small Scottish Independent Building Societies, but most have been swallowed up by Nationwide Building Society – again UK rules apply. It is unclear whether the UK banks would want to continue to lend in Scotland, or how they would be regulated. So far they are saying nothing on the subject.
Apparently Scottish homeowners would also be affected by any changes to the Bank of England increasing interest rates, which Governor Mark Carney told the UK Trade Unions today, is likely to happen next year. I can’t work out how this is the case, or if it’s a bit of Yes / No propaganda.
So, my advice to any mortgage holder eligible to vote? No idea!!
Recent posts
The Equity Release Council has revealed that three in five UK homeowners are interested in releasing money from their property later in life.
Prices for UK houses drop in July 2024
12 days ago
The average seller’s asking price dropped by 0.4% in July, a bigger drop than we have typically seen.
We explore the differences between Millennials and Gen Z and what both generations ideally want from a new home.
Overpaying mortgage vs money into savings
18 Jun 2024
Should you overpay your mortgage? If you can put extra cash away you need to seriously consider whether you should pay more off on your mortgage or put it into a savings account.
Buying a property, especially in the current climate, is a big decision for first time buyers. We have listed a few tips that can help you buy your first propertyy
Does the time of year make a difference in house purchases? The answer is, yes and no.
The popularity of buying a house can vary depending on various factors such as regional trends, how the economy looks, and of course personal circumstances.
6 Garden Tips to Add Value to Your Property
30 Apr 2024
If you are looking at putting your house on the market, you may want to consider giving your garden some TLC. Small changes can make your outside space a lot more attractive to potential buyers resulting in a faster sale.
Averages for a first time buyer in the UK
24 Apr 2024
Getting on the property ladder is a big milestone in life, and is not something to take lightly. There are several things to take into consideration such as saving up for a deposit, finding your dream home, and finding the best mortgage product to suit you. Here we look at UK first time buyer statistics.
More information
Trusted by
