Bank of England Governor Mark Carney has warned government ministers that a worst-case scenario no-deal Brexit could lead to house prices plunging by over a third, the BBC has reported.
The Bank carries out stress tests and its latest one in November found house prices could fall by 33% in a worst case scenario.
Yesterday Carney addressed ministers at Downing Street about the government’s plans for a no-deal and reports said the Governor outlined that inflation and the pound could go down, mortgage rates could spiral and many homeowners could be left in negative equity.
Ray Boulger, senior technical manager at John Charcol, said: “I think there’s been some misleading reporting. It appears to be based on a briefing to the Cabinet. It’s not a forecast but a review of the stress test the Bank did that highlighted what might happen in worst case scenario.
“Most of the banks passed in terms of being able to survive such a massive hit. I think stakes are too high for both the UK and EU to get a no-deal. One should still plan for one as part of the negotiating strategy though.
“The market is now factoring in the risk of a no-deal scenario. When or if we do get a deal and if it’s reasonable it’ll be a positive story.”