Mortgages don’t tend to be directly affected by elections, as one of the biggest drivers for interest rates is the Bank Rate (base rate), which is set by the Bank of England. The Monetary Policy Committee’s next meeting to decide whether to change the base rate is on 20th June, but they are not expected to make a cut before the election.
Of course, as government economic policy changes, that can cause inflation to rise or fall – and that will influence the base rate.
In terms of what the next government is likely to do, Kevin Shaw, National Sales Managing Director at Leaders Romans Group (our umbrella company) says:
“The next government’s focus must be on continuing to reduce inflation so that interest rates fall and mortgages with them. While changes to interest rates, per se, aren’t within the government’s control, creating the right environment for an interest rate change certainly is.”
As it stands, the forecasts are for rates to fall towards the end of this year, and then further in 2025. And if there are no significant economic shifts post-election, this outlook is unlikely to change.
The other thing that can affect mortgage interest rates is an active buying and selling market, as lenders tend to offer better deals to attract more customers. So, if the new government makes housing policy announcements that encourage more people to move home – such as stamp duty cuts and first-time buyer incentives – we could see rates come down in response.
Nathan Emerson, CEO of Propertymark, has commented: “Following the general election, with inflation firmly on its journey downward and with scope for interest rate cuts, we may soon see a much welcome influx of highly competitive deals from lenders hit the marketplace.”
As a borrower, it’s worth knowing that you can tie in a new deal up to six months before your current one expires and switch to a different one at any point. So, if you’re currently in the process of buying, or are looking to remortgage once your existing fixed term has ended, you can lock in a rate now and then if better deals become available after the election, you can change.
The benefit of acting now is that if something should happen to push rates up, you’ve already secured a good deal.
To discuss your borrowing requirements and get expert advice that’s tailored to your own situation, contact our expert team at Mortgage Scout – you can chat online or submit an enquiry, or directly by phone on 0800 144 4744.
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