Labour’s campaign slogan was ‘change’ – but will their landslide election victory bring much-needed change for homeowners, mortgage holders and first-time buyers?
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Freedom to buy – the updated version of the mortgage guarantee scheme – was the striking promise for starters from the election manifesto of Keir Starmer of the Labor Party.
This will make better mortgage conditions available to first-time buyers and make it easier for young people to enter the housing market.
Labour’s plan to give first-time buyers priority over international investors when buying homes is also aimed at helping more people take their first step on the property ladder.
And the pledge to build 1.5 million homes during the next parliament was branded ‘bold’ and ‘ambitious’, but at least indicated the urgent need for more homes.
But what about the interest? Will Labor’s victory mean a cut in the base rate to help struggling homeowners with high mortgage costs?
Nicholas Mendes, mortgage technical manager at John Charcol, explained that when it comes to this specific issue, much depends on how the financial markets react to the new government.
“While Labour’s housing and economic policies are aimed at supporting lower mortgage rates and greater accessibility for first-time buyers,” he explained, “the overall impact will depend on market perception and the successful implementation of their proposed policies.
“From our current position, we do not expect to see the volatility of recent years. With inflation expected to approach the Bank of England’s 2% target, Labor will be in a fortunate position to be in power as mortgage rates continue a downward trend.”
Mendes predicts that there will be two interest rate cuts before the end of 2024. “I expect the Bank of England to make two interest rate cuts of 0.25% each,” he said, “with the possibility of a third cut, reflecting the optimistic outlook for the future. the British economy.
“These measures are expected to boost growth, boost consumer and business confidence and maintain inflation targets, paving the way for a robust economic recovery and financial stability.”
How will the new government tackle the housing crisis?
The promise to Build 1.5 million homes, reforming housing systems and taking a ‘brown field first’ approach to construction, was clearly set out in Labour’s manifesto. But the question this morning, as Keir Starmer prepares for Number 10, is: can the new government deliver on this promise?
Kim McGinley, Director and Specialist Broker at VIBE Finance, said via the Newspage Agency: “The new government will be judged on what they do next. The manifesto contained words, but now we need action to solve a problem that has existed for decades.
“Only time will tell whether Labor can deliver on their promises on the critical issue of housing.”
Meanwhile, Michelle Lawson, director at Lawson Financial, told Newspage: “Keir Starmer now faces a huge uphill battle to deliver on his manifesto promises. Houses of 1.5 million people will not build themselves and affordability will not change overnight.
“The result of the general election is, if nothing else, a huge lesson for politicians to listen to the public who vote for them.”
How will Labor’s victory affect house prices?
House prices have remained stable in the run-up to the general election, increase in June by 0.2% according to Nationwide, while Halifax today reported a 0.2% decline in the same month.
Experts explained that this lack of movement was partly due to the uncertainty surrounding the possible change of government – meaning many potential buyers are reluctant to make a move – along with the high cost of borrowing.
Now that the government is in power and Labor has won by a landslide, will potential buyers gain the confidence to make their move?
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “A stable political environment has the potential to provide a confidence boost to the housing market, especially one that has suffered from high borrowing costs and a shortage of available and affordable housing. stock.
“Buying a first home, upsizing and even downsizing are all important personal finance decisions. That is why trust in the way your country is governed is crucial.”
Nicky Stevenson, chief executive of national estate agents group Fine & Country, also thinks Labor’s victory will be positive for the housing market.
She said: “Buyers and sellers should be reassured by today’s results that the property market is likely to remain robust in the coming months. A further rebound in the housing market is expected once the political climate calms down.”
She continued: “It will be very interesting to see how the new Labor government injects some fresh ideas into the sector, after several years of dramatic rises and falls in house prices and property transactions.”
Stevenson concluded: “Overall, there is room for cautious optimism for the remainder of the year and the property and financial markets will benefit from a decisive majority for the government, in contrast to the instability that could have threatened with a hung parliament .”