The Brexit referendum in the UK has created significant rumbles throughout the global financial markets, and it is absolute that there will be continued uncertainties for quite some time. The reading of various commentaries at the moment, out of the UK and Europe, is interesting. London is currently the financial hub of Europe, whilst the whole of Europe presents the largest collective trading group in the world. There is no doubt that actions now being considered by the UK, and in fact individual countries in Europe, will have significant impact for everyone.
UK headed for recession?
A number of the Eurozone member countries are relying heavily on their partners for support, and this event will certainly rattle some cages, hence the “uncertainty” ahead of us. Most actually predicted that the outcome of the referendum would be to stay, and this also is why there has been a significant initial kneejerk reaction in the markets, and many economists are suggesting that the progress from here is up there in significance when compared to events such as the great depression, and the Global Financial Crisis of more recent times. Potentially, the UK is headed for recession.
New Zealand business as usual
However, the New Zealand markets are actually pretty well placed and likely to continue business as usual, despite our local issues of property prices and reliance on exports being impacted by exchange rates. We believe that New Zealand will largely escape a lot of the northern hemisphere fallout, and pressure on current low interest rates fuelling borrowing, and exchange rates being at higher than desirable levels for exporters, would suggest that our lending rates are most likely to stay at current low levels for some time yet. There may be some pecuniary additional costs impacting on the wholesale cost of funds for the Banks, which may be passed on in subtle rate adjustments, but we don’t think the Reserve Bank will be lowering the OCR at the next review.
On the home loan side of things, our Advisers are turning out some great results for clients including less than 24-hour finance approvals so clients can get to auction at the last minute.
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About the AuthorName: Jon O’Connor
Jon is the General Manager of Rothbury Life & Morgages, a nationwide life insurance and mortgage advisory operation for Rothbury Insurance Brokers
Jon is the General Manager of Rothbury Life & Morgages, a nationwide life insurance and mortgage advisory operation for Rothbury Insurance BrokersClose