The General Election Effect: How the Upcoming Vote Will Impact Interest Rates

As the UK gears up for the general election on July 4, economists are warning that the chances of a June interest rate cut are dwindling. The Bank of England’s Monetary Policy Committee (MPC) is expected to keep interest rates at 5.25% until at least August, dealing a blow to homeowners who were hoping for some relief.

The Bank of England’s decision to keep interest rates high will have a significant impact on mortgage holders.

The election has effectively killed off any hopes of a June interest rate cut, with experts now predicting that the next government will be the one to benefit from a rate cut in August or the autumn. This will provide an easy boost to the new government, as the reduction will filter into some households’ mortgage rates.

“The election campaign would reinforce the MPC’s desire not to surprise markets with an unexpected rate decision.” - Michael Saunders, former member of the MPC

The Bank of England’s independence from the government means that the election will not directly impact its decision-making. However, former members of the MPC have told us that election periods do pose challenges to decision-making.

The general election will have a significant impact on the economy, including interest rates.

The average two-year fixed residential mortgage rate today is 5.91%, according to Moneyfacts. Brokers have warned that homeowners will not likely see deals consistently fall until after a base rate cut.

“Until a reduction in the bank rate occurs, there will be a period of uncertainty that prompts markets to speculate and continually adjust their forecasts.” - Nick Mendes, John Charcol brokers

The delay in interest rate cuts will have a significant impact on mortgage holders, who were hoping for some relief from the high interest rates. As the election approaches, it’s clear that the next government will have a significant impact on the economy, including interest rates.

Mortgage holders will have to wait longer for interest rate cuts.