Sir Keir Starmer’s landslide victory in the general election, securing 411 seats in parliament, has introduced a potential new era of stability and confidence into the market.
This majority allows Labour to efficiently implement policies in parliament, providing reassurance to markets. UK businesses, in particular, will welcome a business tax roadmap that clearly outlines the future tax system in the medium term, especially when investing in large financial projects.
The immediate view suggests that Labour’s victory appears to have settled the mortgage market. Reports from Zoopla and Rightmove suggest that many prospective home movers have remained largely undeterred by this election. We await to see how Labour’s fiscal policies impact affordability later in the year and future announcements made in their first budget. The potential surge in private school fees remains a significant concern for many parents.
Optimism in the air
The hope now is that this renewed sense of confidence will reinforce steady growth in house prices and anticipations of rate cuts into 2025. According to Halifax, current annual house price growth is at 1.6% with modest increases expected through the rest of the year and into 2025.
Major lenders announced mortgage rate cuts leading up to and following the election. SONIA (Sterling Overnight Index Average) swap rates, particularly 5-year swaps, have fallen again following the election—a positive move for fixed-rate mortgages. The market had likely priced in a Labour victory, and the announcement confirmed these expectations. Now, the next major economic expectation is the anticipated first base rate cut this year, which would likely signal a major market shift and a departure from the highest mortgage rates for now.
Addressing the housing crisis
Labour’s housebuilding targets include constructing one and a half million new homes within the next five years, aiming to boost affordable housing and provide support for first-time buyers. New housing policies should focus on serving the market in the longer term, providing affordable, good-quality housing and market stability. The ongoing housing supply shortage highlights the need for significant reform, particularly to support first-time buyers.
One key area Labour will need to address is stamp duty changes, particularly for those looking to downsize and free up much-needed good-sized family homes back into the housing market.
Is now a good time to buy after a recent election?
It is important to remember that property transactions typically take months to complete, whereas new policies could take months or years to implement. If significant measures are introduced, they would likely be in place before the exchange of contracts, allowing for possible renegotiations if surprise policy changes affect future house prices. Property transactions are long-term investments; a fixed-rate mortgage can help navigate market fluctuations over the next few years.
Now could be an advantageous time to buy, with positive property price forecasts over the next few years and current market demand being lower. Considering the strong pent-up demand, later in the year could be a much busier time for the property and mortgage market.
If this scenario resonates with you or you’re seeking personalised mortgage advice for another situation, please get in touch — we’d be happy to see how we can help. Call us on 0800 652 0971 or email info@privatefinance.co.uk.
Disclaimer:
The information presented in our case studies is intended for illustrative and marketing purposes only. Some case studies may be based on multiple enquiries or hypothetical scenarios to demonstrate typical processes or outcomes. Not all case studies represent completed business transactions, and the inclusion of a case study does not imply that the business was successfully concluded.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
