5 Ways Brexit Won’t Impact Contractor Mortgages

A Super Contractor should be prepared for every eventuality. While many in the city may not have backed Brexit or even anticipated the result – I was busy calculating what a leave vote would mean for contractors like myself. No, my powers are not psychic in nature, but simply those I put into operation every day in my role as a (Super) IT contractor – foresight and planning.

Here are my five reasons why Brexit won’t impact negatively on UK contractor mortgages.

1. The BOE Contingency Plan

Like any super contractor worth his cape and day rate – Bank of England Governor Mark Carney, was quick (as The Flash) to announce that the Bank had prepared for every eventuality; duly unveiling a cunning contingency master-plan designed to protect the economy from negative effects in the the outcome of leaving the EU. In fact, since the last crash of 2008, the Banks have been simulating and stress testing far more severe scenarios than those we currently face to shape the battle plan. Are they ready? It’s worth noting that the money held by the biggest British banks is ten times what it was before the crisis of 2008; some £130 billion of capital and £600 billion of high quality liquid assets; something Carney says ‘gives banks the flexibility they need to continue to lend to UK businesses and households, even during challenging times.¹ In short, the UK banks are more stable – while ‘Fred The Shred’ could only lend from his piggy bank to close friends and family, Mark Carney has the resources of Lex Luthor, and a better head of hair besides.

2. Even Lower Interest Rates for Contractor Mortgages

Whatever way you voted, the fact is ‘we are where we are’. So, while the banks navigate a foreseen period of uncertainty and adjustment, the BOE is widely tipped to slash UK base interest rates from a record low of 0.5% to 0.25% by the end of 2016.² Gadzooks! If Interest rates stay this low, we’ll all be forming an orderly queue at our banks for (almost) free loans. Take that, Payday Loan Lenders!

So what does that mean for contractor mortgages? Well, with lower BOE interest rates in place, mortgage lenders could take a hatchet to mortgage rates to lure customers with new, cheaper deals. In short, not only could this mean lower contractor mortgage rates, but also lower asking prices for available property, while uncertainty abounds.

3. Carpe Diem (I knew learning Latin in school would finally come in handy)

As Contractors, we have the ability to speculate and act fast. On 16th September 1992 George Soros made an estimated £1 Billion from short selling the GB Pound on Black Wednesday. Granted, he almost collapsed the UK economy in the process, at an estimated cost of £3.3 Billion³, but the point is, know your onions, be agile, and the opportunities are there.

UK Pound Devalued
Today, the value of Sterling is at a 30 year low against the USD, and other currencies. This is a positive for exported UK products and services who are currently enjoying renewed international demand as a result of buyers gaining more value for money.

Lower UK Corporation Tax Rates
With George Osborne proposing the lowering of UK Corporation Tax (CT) to 15%, the UK is being cited as a potential Tax Haven for Corporations.

Booming FinTech Market for Contractors
Despite all the uncertainty, what is certain is the fact that Financial Technology Contractors are in demand. Here’s a quick list of the highest-paid contract IT jobs in UK FinTech companies (figures refer to average daily rates):

Project Management: £425
System Administration: £450
Software Engineer: £464
Database Administration: £491
Database Developer: £495
Programme Management: £503
Unix Administration: £544
Technical Architect: £625
ERP: £700
IT Security: £700

Source: Sonovate 4

4. Brexit – Great for contractors

Ahead of the Brexit vote, many head honchos were putting big appointments on hold. According to a poll by Randstad, around a quarter of the professional firms surveyed were using contractors due to the uncertainty. The result is that many companies may continue to hire ‘contractors’ or temporary staff in the short term.5 So make hay while the sun shines!

5. Upheaval Means Transformation Projects

You heard it here first. I predict an increased demand for Super Contractors (like me) as the UK starts getting its own shiny new systems in place. Speaking with many recruitment agencies, they sense the UK leaving the EU could mean many high level transformation projects will be required, triggering substantial demand for fellow skilled contractors and freelancers in IT, Finance, Business Analysis, etc.

A key strength of being a Contractor is our flexibility. Employers and recruiters know this, and we’ll be the first workers called upon when the work requirements come in. So, if David Cameron, BOJO and Farage are considering their next moves – potentially retraining as Contractor Systems Analysts could be the smartest thing they’ve done this year!

In summary, despite all the uncertainty of the UK Brexit, I believe it will bring many opportunities for Super Contractors. What are your thoughts?

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Sources:

  1. Statement From The Governor Of The Bank Of England Following The EU Referendum Result | Bank Of England. Bankofengland.co.uk. N.p., 2016. Web. 1 July 2016.
  2. London South East News, Bank Of England Chief Hints At Interest Rate Cut After Brexit Shock
    Thu, 30th Jun 2016 18:04
  3. UK Government Papers released under 2005 Freedom of Information Act show that if the government had maintained $24 billion foreign currency reserves and the pound had fallen by the same amount, the UK would have made a £2.4 billion profit on sterling’s devaluation.
  4. Sourced by recruitment finance provider Sonovate, Q1, May 2016
  5. IQ Contracts, Brexit ‘may benefit contractors‘, 29 June 2016