What a Labour Landslide Means for Your Mortgage

The recent Labour Party victory in the General Election has sent ripples through the mortgage market, with lenders slashing interest rates and more changes on the horizon. As Keir Starmer takes power, homeowners and aspiring movers are waiting with bated breath to see what this means for their mortgage prospects.

Mortgage rates have been falling recently

Mortgage rates have been falling, with HSBC and Barclays cutting their rates again from today. According to Sam Lindsay, mortgage planning advisor at My Mortgage Angel, the industry remains optimistic that the new Government will bring stability and optimism to the market.

“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,” Lindsay said.

Labour’s Plans for the Mortgage Market

Labour previously set out plans to make permanent the mortgage guarantee scheme, where the Government acts as a guarantor for part of a mortgage. This could be a game-changer for first-time buyers and those looking to move to larger homes.

“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,” Lindsay added.

What This Means for First-Time Buyers

Myron Jobson, senior personal finance analyst at interactive investor, believes that many first-time buyers will be waiting to see whether Labour’s pledge to make permanent the mortgage guarantee scheme will see the light of day, and if so, how quickly it will be rolled out.

“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,” said Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners.

“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,” Haine added.

The Impact of Interest Rate Cuts

Throw in interest rate cuts, however, 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.

Mortgage rates could fall further

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.

As the mortgage market continues to evolve, one thing is certain - the Labour Party’s victory has brought a sense of optimism and stability to the industry. Whether this translates to tangible benefits for homeowners and aspiring movers remains to be seen, but one thing is for sure - it’s an exciting time to be in the mortgage market.