Will the General Election affect borrowing and mortgage rates? 🏛️💷
Is now the right time to buy? 🏡🔍 Will the election impact borrowing rates and mortgages? Here we look at predictions on interest rate movement and what we can expect from the market. 📈📉
Firstly, it’s important to note that mortgage rates are not directly set or determined by the government. Mortgage rates are set by lenders, and influenced by multiple factors. One of these is the Bank of England base rate of interest. The Bank of England is independent so should be free from party political influences. This means whoever is in charge shouldn’t affect the base rate. ⚖️🏦
That being said, political events such as elections can still cause economic disturbances that can, in turn, impact interest rates. This is usually due to the uncertainty brought about by elections. 🗳️📊
Since the date the General Election was confirmed on 22 May:
• The average swap rate (the amount lenders pay for funding for a fixed period) for a two-year fixed-deal rose from 4.5% to 4.7%, and is now down to 4.6% 📉
• Mortgage rates have remained relatively stable, with the average fixed rate across five of the biggest lenders remaining at 5% since mid-May, but it has just increased to 5.1% 📈
Will mortgage rates fall after the General Election? 🤔
It’s difficult to predict what will happen with mortgage rates after the General Election. There are a number of factors that will impact this such as inflation, base rate decisions, and lender reactions. 📊💭
Despite the base rate remaining at 5.25% since August, mortgage rates have been very changeable. 🔄
The recent decision by the European Central Bank to cut interest rates in the Eurozone added to the pressure on the Bank of England to bring its base rate down from its current 14-year high of 5.25%. However, it’s unlikely that the Bank’s Monetary Policy Committee will move before the election. 🏦
City traders have circled the Bank’s August and September meetings as the two most likely dates for a cut. 📅✂️
Should I wait until after the election to get a new mortgage? 🏡💭
For those with an existing mortgage ending imminently
If your mortgage is going to end very soon, the average standard variable rate is above 8% while the average fixed rate is currently 5.1%. So, waiting for rates to fall before you remortgage could be an expensive strategy. If you decide to do this, make sure to budget for any monthly increases you face in the short term. We recommend getting independent mortgage advice. 💡📉
Those needing a mortgage in the next 6 months
If you are likely to need a new mortgage in the next six months, whether for a new property or your existing one, talk to an experienced mortgage broker. They can recommend the best deals for you, advise you on the current market and what your monthly repayments could look like, and answer any other questions you may have. 🗨️🏠
Conclusion 📝
Whilst we can’t predict the future, we know historically after an election buyer demand increases (history would support this). A recent article from The Standard also confirmed that experts predicted this surge in demand once the general election is out of the way and that interest rates will start to fall. To take advantage of this, now is the right time to gather your information so you can make an informed decision when the time comes and react quickly. Information is power. 📚💡
Why not contact the office to arrange a property valuation? We love to offer our clients options and can value your home in a number of different ways depending on the time you have and the accuracy you want. Click the link below and pick whatever suits you best. 🏡📲
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