The result of the EU referendum has caused a lot of concern about how the British economy will handle leaving Europe. So, how will the vote to leave the EU affect households financially?
We’ve broken it down for you here.
People’s cash will continue to be protected if their bank or building society goes bust in the same way as it is now. The Financial Services Compensation Scheme (FSCS) refunds savings of up to £75,000 if your bank, building society or credit union goes under. The British Bankers’ Association (BBA) has said banking services will continue “as normal” for the foreseeable future.
Falls to the pound will hit holidaymakers’ spending power abroad. There have already been signs of people flocking to change their money and holidaymakers have been advised to watch currency movements very closely.
The Association of British Insurers (ABI) has said travel insurance products will continue to offer all of the cover that they do at the moment and there will be no immediate change to existing policies.
The BBA has said you will still be able to use cash machines and pay by card when travelling and online and mobile banking will not be affected – although it said roaming charges might change over time so customers are advised to check tariffs with their provider.
The cost of filling your car
The AA has predicted that fuel prices at the pumps are likely to creep up following falls to the value of the pound.
The housing market
Housing market experts expect the pace of house price growth to slow down and fewer sales to take place as potential buyers and sellers sit it out while the dust settles.
London, which has attracted strong interest from foreign property investors in recent years, is predicted to see a particularly strong impact.
But it has been suggested that the weaker pound could also encourage some foreign property investors to snap up homes in the capital while they appear relatively cheap. In the longer term though, a shortage of properties on the market is expected to support house prices.
Mortgage and savings rates
Homeowners have enjoyed ultra-cheap mortgage rates while the Bank of England base rate has sat at its 0.5% low since March 2009, while savers have seen their returns vanish.
Now, City experts are predicting the base rate could be chopped further, spelling more bad news for savers.
And Knight Frank said that despite any rate cut, there was a chance mortgage lenders may raise their rates as a way of controlling their lending levels amid the uncertain economy. This could make mortgages harder to come by and more expensive. But many homeowners have taken out fixed-rate mortgage deals in recent years, which would cushion them from any immediate impact if mortgage rates started increasing.
The BBA has said it is too early to tell how a leave vote will affect mortgage and savings rates.
Pension savers have been warned by experts to think carefully and consider taking advice before making any decisions amid the current volatility.
It has also been suggested there may possibly be some changes to the state pension ahead, such as potentially increasing the state pension age more rapidly or getting rid of the “triple lock” – a mechanism that guarantees the state pension is increased by a certain amount.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said annuity rates – which give people who are retiring a guaranteed level of income – have already fallen recently.
He said: “A 65-year-old today is getting a lower rate than a 60-year-old would have done just six months ago.
“We’re into uncharted territory now so it is hard to predict whether annuity rates have further to fall or how much lower they might go.
“Annuity quotes are typically guaranteed for two to four weeks so investors who are worried about a further drop in rates should get their skates on. As always, make sure you shop around to get the best deal and to secure any enhanced rates you might be eligible for.”