I doubt that Osborne's worry that mortgage rates will rise after Brexit is right

It's being reported that George Osborne warns that Brexit will prompt a rise in mortgage rates.  I doubt this.

There are two plausible things to worry about.  First, the drop in confidence and demand that would follow from news that we were to leave, as uncertainty about what 'out' means and the central expectation that it means lower prosperity, weigh on the plans of firms and consumers.  Second, the drop in Sterling that would probably occur.

The Chancellor's logic seems to be that the fall in Sterling would cause inflation to rise, and that this would push the BoE to raise its policy rate.

My guess is that the confidence effect would outweigh this effect of Sterling.  And anyway that the BoE would probably look through what was i) something that would affect inflation only temporarily, as import prices adjusted to a new, higher level and ii) partly a consequence of the world expecting UK interest rates to stay lower for longer.

If events played out very badly indeed, it's possible that worries might mount that the banks doing mortgage lending would have difficulty funding themselves, and this may lead to banks charging higher mortgage spreads, and contracting mortgage lending.  Thus, despite the policy rate being lower than if Brexit had not been triggered, mortgage rates might not be lower, and may even rise.

But to me that eventuality looks relatively unlikely.

That mortgage rates are unlikely to rise following Brexit is not to say that Brexit is not to be worried about, of course.  On the contrary.  We should all be hoping that the recovery proceeds so that the monetary policy rate and the mortgage rate can rise to more normal levels.  The fact that Brexit would postpone this is not to be welcomed, but feared greatly.  And a major reason why it is daft to contemplate leaving at all.