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Savers’ trusted champion has a positive message: ‘This isn’t a Lehman moment’ Savers’ trusted champion has a positive message: ‘This isn’t a Lehman moment’
(2 months later)
Martin Lewis, the man most trusted by the British to inform them about their personal finances, is shocked by Brexit but calm about the consequences. After all, on his own assessment he was only ever 55% in and 45% out.Martin Lewis, the man most trusted by the British to inform them about their personal finances, is shocked by Brexit but calm about the consequences. After all, on his own assessment he was only ever 55% in and 45% out.
“I don’t see any reason why financial products, apart from mortgages and savings, should change that much now. I don’t believe this is a Lehman moment. Mark Carney has stepped in to stop that. There are much better capital requirements for the banks; Basel III has done its job. There is a much better system in place.”“I don’t see any reason why financial products, apart from mortgages and savings, should change that much now. I don’t believe this is a Lehman moment. Mark Carney has stepped in to stop that. There are much better capital requirements for the banks; Basel III has done its job. There is a much better system in place.”
His consumer website, MoneySavingExpert.com, with 15 million users a month, is a barometer of the financial concerns of Britain’s low- and middle-income workers. On Brexit day the site’s forums were alive with speculation – and the safety of the financial system was at the forefront.His consumer website, MoneySavingExpert.com, with 15 million users a month, is a barometer of the financial concerns of Britain’s low- and middle-income workers. On Brexit day the site’s forums were alive with speculation – and the safety of the financial system was at the forefront.
Related: ‘I’ve had my dark days.’ Why Martin Lewis knows mental illness and money don’t mix
Lewis says: “We are being asked a lot about the £75,000 safety net for savings. Is it going to take a hit from leaving the EU? It is true that the limit is set by the EU, but it’s run by the British Financial Services Compensation Scheme. It’s not about to disappear.”Lewis says: “We are being asked a lot about the £75,000 safety net for savings. Is it going to take a hit from leaving the EU? It is true that the limit is set by the EU, but it’s run by the British Financial Services Compensation Scheme. It’s not about to disappear.”
As the FTSE fell, at one stage by nearly 500 points, Lewis said that the “initial shock can be overcome”. Later in the day on Friday it recovered to a fall of just under 200 points, with sterling off 5% against the euro but by more against the dollar.As the FTSE fell, at one stage by nearly 500 points, Lewis said that the “initial shock can be overcome”. Later in the day on Friday it recovered to a fall of just under 200 points, with sterling off 5% against the euro but by more against the dollar.
The longer-term impact of EU withdrawal worries Lewis most. “In 2018-19, when we leave the EU, what will our trading situation be like?”The longer-term impact of EU withdrawal worries Lewis most. “In 2018-19, when we leave the EU, what will our trading situation be like?”
More immediately, he thinks that savers could be hit because interest rates are more likely to fall than rise. Intense pressure on sterling would normally force the Bank of England into raising interest rates, says Lewis, but with sentiment so battered by Brexit the next move could be down.More immediately, he thinks that savers could be hit because interest rates are more likely to fall than rise. Intense pressure on sterling would normally force the Bank of England into raising interest rates, says Lewis, but with sentiment so battered by Brexit the next move could be down.
In a message to his site users issued soon after the result, Lewis said: “Overall, my suspicion (and this is pure guesswork) is that interest rates will remain roughly similar to as they are now, or perhaps be cut a touch if things go wrong.”In a message to his site users issued soon after the result, Lewis said: “Overall, my suspicion (and this is pure guesswork) is that interest rates will remain roughly similar to as they are now, or perhaps be cut a touch if things go wrong.”
In the wake of the vote, the Bank of England said it was prepared to inject an additional £250bn into money markets to ensure that financial institutions did not run short of cash. Bond yields fell, which may translate through to more sub-2% fixed-rate mortgages appearing in the coming days, but Lewis is not so sure. “Though there’s a chance things could get even cheaper, the safer option is to bag a cheap deal right now, rather than playing the markets.”In the wake of the vote, the Bank of England said it was prepared to inject an additional £250bn into money markets to ensure that financial institutions did not run short of cash. Bond yields fell, which may translate through to more sub-2% fixed-rate mortgages appearing in the coming days, but Lewis is not so sure. “Though there’s a chance things could get even cheaper, the safer option is to bag a cheap deal right now, rather than playing the markets.”
Flooding the money markets with cash also spells problems for savers, warns Lewis, as banks will be less bothered about attracting deposits by offering good cash Isa deals.Flooding the money markets with cash also spells problems for savers, warns Lewis, as banks will be less bothered about attracting deposits by offering good cash Isa deals.
Related: Mark Carney says Brexit contingency plans under way
When it comes to the question uppermost in the minds of many young adults – should I still go ahead and buy a home, given the concerns about house price falls – Lewis says: “A number of people have been asking if they should complete on the house they’re in the process of buying. If it’s the house that’s right for you, it’s within your budget and you’ve got a decent mortgage that you can afford, then I think the best human decision, if not financial, is to carry on and go for it.”When it comes to the question uppermost in the minds of many young adults – should I still go ahead and buy a home, given the concerns about house price falls – Lewis says: “A number of people have been asking if they should complete on the house they’re in the process of buying. If it’s the house that’s right for you, it’s within your budget and you’ve got a decent mortgage that you can afford, then I think the best human decision, if not financial, is to carry on and go for it.”
One positive from Brexit could be the end of the EU mortgage credit directive, which Lewis has been campaigning against because, he says, it results in “ludicrous lending decisions”.One positive from Brexit could be the end of the EU mortgage credit directive, which Lewis has been campaigning against because, he says, it results in “ludicrous lending decisions”.
The directive has forced affordability criteria on borrowers who are remortgaging that make little sense, says Lewis. But while he welcomes the prospect of the UK no longer being bound by the directive, he wonders if the problem was the Financial Conduct Authority’s interpretation of the rules as much as anything else.The directive has forced affordability criteria on borrowers who are remortgaging that make little sense, says Lewis. But while he welcomes the prospect of the UK no longer being bound by the directive, he wonders if the problem was the Financial Conduct Authority’s interpretation of the rules as much as anything else.
Before the referendum, a YouGov poll found that Martin Lewis was trusted equally by both sides of the Brexit debate, and well ahead of any politician or celebrity.Before the referendum, a YouGov poll found that Martin Lewis was trusted equally by both sides of the Brexit debate, and well ahead of any politician or celebrity.
Some of his more fervent supporters now want him to replace George Osborne as chancellor, or even stand for prime minister. “After David Cameron said he was standing down, there were lots of people on Twitter asking me to stand. I would rather have my nipples attached to electrodes, and not in a good way. I never want to engage in party politics.”Some of his more fervent supporters now want him to replace George Osborne as chancellor, or even stand for prime minister. “After David Cameron said he was standing down, there were lots of people on Twitter asking me to stand. I would rather have my nipples attached to electrodes, and not in a good way. I never want to engage in party politics.”
Despite being so much in the public eye, Lewis says he was burnt by the response to his personal assessment 55/45 in favour of remaining. “I had people attacking me as a traitor to my country, and some were even mooting violence. It was horrible.”Despite being so much in the public eye, Lewis says he was burnt by the response to his personal assessment 55/45 in favour of remaining. “I had people attacking me as a traitor to my country, and some were even mooting violence. It was horrible.”
The lesson for politicians from the referendum result is that they have lost their connections with the people, says Lewis, who reveals that he is now starting on a big project to help.The lesson for politicians from the referendum result is that they have lost their connections with the people, says Lewis, who reveals that he is now starting on a big project to help.
“High on my list is how to get politicians reconnected with people. MoneySavingExpert connects with people, and we need to be able to find ways that politicians can better connect as well.”“High on my list is how to get politicians reconnected with people. MoneySavingExpert connects with people, and we need to be able to find ways that politicians can better connect as well.”