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Well, that was unexpected.
Last Friday, voters in the United Kingdom surprised markets when a small majority voted in favour of leaving the European Union (EU). While the polls showed a tight race between the Leave and Remain sides, markets were giving about 70% odds to the Remain side pulling through. History has shown that on votes like this, with Scotland’s referendum on independence the most recent example, momentum tends to swing in favour of the status quo at the last minute when voters stand in the voting booth and face their moment of truth. While the Remain side did appear to gain some last-minute momentum, this time, it was too little, too late.
Here are five key observations relating to the Brexit, followed by my take on what last Friday’s vote result will mean for our mortgage rates:
- The Brexit may well break up the UK along with the EU – Scotland’s independence vote (on whether to leave the UK) had a closer margin than its Brexit vote: 55% of Scots voted to stay in the UK two years ago and 62% voted to stay in the EU. With Brexit, they can no longer do both, and Scotland’s leaders have already announced plans for another referendum which asks its citizens to choose between the two. Northern Ireland also voted to remain in the EU, with 56% in favour of Remain. Could Brexit lead to the reuniting of Ireland? Is anyone betting against that outcome at this point? It will be interesting to hear the leaders who supported the UK’s exit from the EU try to make the other side of the Remain/Leave argument to voters in both countries when (Scotland) and if (Ireland) the time comes.