The recently concluded election in the UK could be a game changer for mortgages…or is it?

With the Labour Party taking the governing reigns of the country, there is speculation that the housing and building sector will benefit with some marked changes.  In fact, the party leader Keir Starmer and the deputy leader have stated that the Labour party is “the party of homeownership. Our changed Labour Party will be on the side of the builders, to get Britain building again.”

What can change in the mortgage landscape?

Lenders are always on the lookout when elections are around the corner. This period of uncertainty can pose challenges to lenders or work in their favour when it comes to gaining on lending rates. Losing out on mortgages is the last thing a lender would want to face. Equally, a borrower is looking forward to better and lower borrowing rates. And the outcome following an election could work well for both parties or could be in favour of one party. Which could end up being unfair, a negative when it comes to getting a mortgage.

Interest rates

This is probably the most important component when government policy changes are made that affect mortgages. Lenders alike borrowers are apprehensive of what may lie ahead. Predicting future interest rates is difficult and given the volatility of election outcomes and policy decisions, the mortgage market is bound to have difficulties in predicting stable interest rates. For the time being, the base rate of 5% is set by the Bank of England for mortgage stays. However, there is speculation that in August, rates could be revised and possibly be lower than the current rate.

Some lenders may actually opt to decrease borrowing rates anticipating changes in the near future. This could translate to attracting borrowers and getting ahead of the competition. 

First-time borrowers

There’s no guarantee that elections in the UK will bring about significant changes when it comes to mortgages, but as a first-time borrower, you may want to keep a close watch on how lending rates play out. For a start though, effective August 1st, the Bank of England (BoE) reduced its base rate by 0.25% to 5%. With inflation currently at 2.2%, BoE’s target is to further bring it down to 2%. This means more good news for borrowers. Monitoring these figures closely can be beneficial for first-time borrowers seeking to make the most of their investment.   

Sustainable building options

‘Brownfield first’, this housing policy brought on by the Labour Party aims to use disused, industrial or abandoned but built-on lands for new construction. This is seen as a sustainable measure reducing the usage of unused ‘green belt’ lands. The green lands will be utilised for promoting environmentally friendly activities, mainly agricultural.

These used lands or Brownfields as they’ve been termed, could be a good opportunity for many property seekers who intend on building their own home or even starting on commercial enterprise. Since this is a measure that is still being implemented, details of the land and their location stands to be evaluated. However, since they are already used lands, we could assume the value of these properties are high.  

Conclusion

With the completion of the UK’s election, a new government is now in power and there’s a lot to look forward to. Speculation and anticipation is the name of the game especially when it comes to mortgages. Property is a highly valued and sought-after commodity. With new policies aimed at promoting housing, construction and property purchase, the mortgage market is certainly looking at wider options for growth within the industry.

As a first-time buyer or a business person, you may find these new developments in the property sector encouraging. Keep a watch on base rates and other positive changes relating to mortgages to make a gainful move. You could also contact a mortgage adviser at BVS Mortgages and Financial Services LTD. These experienced advisers will provide you with updated information and help you make the most on your next property purchase.

Most buy-to-let and commercial mortgages are not regulated by The Financial Conduct Authority.

* Approved by the Openwork Partnership on 22 Aug 2024