The Labour Party taking power in the General Election could have major implications for your mortgage.
Keir Starmer’s Labour Party has won a huge majority with over 400 seats to form the new Government.
Mortgage rates have been falling recently, with HSBC and Barclays cutting their rates again from today.
Sam Lindsay, mortgage planning advisor at My Mortgage Angel, said: « When the news of the snap election came, many homeowners and aspiring movers took a wait and see approach to see if the new Government would bring some stability to the market.
« Now the results are in, the industry remains optimistic that this will bring the stability and optimism needed.
« The reality is that the property market is largely driven by interest rates, capital growth and house prices. Time will tell us a lot but the reality is the housing market desperately needs some impetus. »
She urged the new Labour administration to act quickly to help the market. Ms Lindsay said: « The new Government needs to make some changes to get the market picking up pace again, and it needs to make those changes sooner rather than later.
« Changes to stamp duty would be welcomed, greater initiatives for both buyers and sellers alike and bringing a helping hand back to first time buyers would be a great place to start. »
Labour previously set out plans to make permanent the mortgage guarantee scheme, where the Government acts as a guarantor for part of a mortgage.
The policy is intended to encourage lenders to offer low-deposit deals introduced in 2021 and was extended until July this year.
Myron Jobson, senior personal finance analyst at interactive investor, said: « Many first-time buyers will be waiting with bated breath to see whether the pledge to make permanent the mortgage guarantee scheme designed to ensure low-deposit mortgages will see the light of day, and, if so, how quickly it will be rolled out. »
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, gave her predictions for the months ahead.
She said: « Interest rates have remained at a 16-year high of 5.25 percent for almost a year causing major affordability challenges for first-time buyers and those looking to move to larger homes.
« While the combination of lower inflation and strong wage growth has offered a slight boost to housing affordability, for many the dream of home ownership is still out of reach.
« Throw in interest rate cuts, however, with the first reduction expected as early as next month on August 1, and, in turn, more competitive mortgage rates and the market could experience a surge in demand.
« Several major lenders have already begun trimming their headline deals and while a UK rate reduction would improve mortgage rates for new borrowers and those on trackers, it won’t ease the concerns for those locked into fixed rate deals with some time left to run.
« Those on long-term fixes taken out before or during the early stages of the Bank of England’s rate-hiking cycle will still face higher repayments when they eventually come to refinance. »
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