Mortgage blog: Scottish ‘yes’ vote could push up the cost of mortgages

Posted 10 September 2014

A ‘yes’ vote in the Scottish independence referendum could result in higher borrowing costs and more expensive mortgages. That’s the view of leading estate agent Strutt and Parker who have warned mortgage borrowers that mortgage rates may rise in the event of a vote for independence in the referendum on 18 September.

Average mortgage payments could rise by up to £5,200 per year

Research from a leading estate agent has found that the cost of mortgages could rise if the country were to decide to become independent this September. Strutt and Parker have found that average monthly payments could rise by over £100 of the electorate decides to vote to leave the United Kingdom.

Ratings agencies Moody's and Standard & Poor have reported that an independent Scotland would be given an A grade rating, similar to that of Czech Republic and two levels below the UK's current AA1 rating. This would mean that borrowing costs for a new government will be higher.

The National Institute of Economic and Social Research (NIESR) estimates that an independent Scotland would be subject to higher sovereign yields and that these may push up mortgage rates.  NIESR estimate an extra cost of £1,700 per annum to individual mortgage payments.

The report also found that if Scotland decided not to accept its share of the national debt that further rises in interest rates would occur. This could potentially lead to a steep increase of £5,200 per annum on the average mortgage.

In addition, the uncertainty over which currency an independent Scotland would use means that it is difficult to predict exactly what mortgage lenders will do with existing Scottish customers. Were Scotland to introduce a new currency this could also lead to higher interest rates.

Stephanie McMahon, head of research at Strutt & Parker, says:  “A crystal ball would be handy, especially when predicting the outcome of a highly emotive and personal vote. Our analysis has instead focused on the facts and figures around the vote and what future independence might mean for the markets.”

Keith Osborne, editor of, says: “One of the major problems facing the mortgage and housing market in Scotland at the moment is the uncertainty surrounding the outcome of the independence referendum.

“A ‘no’ result would result in stability and confidence returning to the market but a vote for independence is likely to prolong the uncertainty. The end result of independence is likely to be higher borrowing costs and instability – at least in the short term – and so mortgage borrowers north of the border can expect mortgages to become more expensive.”

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