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UK election and mortgage rates

Anya GairAnya Gair
Last Updated 30 May 2024

Following Rishi Sunak’s surprise election announcement, it wasn’t long before the focus turned to how the election will affect our wallets. If you’re a homeowner, home mover or first-time buyer, you’ll probably be wondering how the election will impact mortgage rates.

How will the election affect mortgage rates?

At the moment, the election looks unlikely to have a huge impact on mortgage rates. This is because so far there isn’t a huge policy divide between the two main parties, and what housing policies Labour and Conservatives do have are currently focussed on reforming renting and boosting housing supply. There have been some lenders who since the election date announcement have raised their rates including the UK’s biggest lender Barclays, but others like Santander, Halifax and TSB have cut their fixed rate deals. 

The next meeting for the Bank of England’s MPC will be on the 20th June, two weeks before the election. The Bank has been independent from the government since 1997, so the general election will have no direct impact on whether it cuts its base rate of interest or not. Plus, since becoming independent, the Bank has never cut rates immediately before a general election, and it’s unlikely they will buck that trend this year.

Because of this, the market is now anticipating the base rate won’t be cut from it’s current 16-year high of 5.25% until September - two months later than previous forecasts - with a second cut anticipated in early 2025. This is despite inflation falling to 2.3% - close to the Bank of England’s 2% target and a three-year low. So it’s unsurprising that average mortgage rates have stayed stable since the election news. We could see rates continue to drop in the run up to a likely base rate cut, as they have done over the last week, but nothing is for certain. 

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The interest rates shown are an indication only and are not guaranteed. Current rates may have changed by the time you come to apply.

There’s hope for first-time buyers

Despite the election shock, homeownership rates have started to recover among the young, and is now at its highest level in more than a decade, and first-time buyer activity is expected to grow this year. Overall mortgage applications have risen by around a quarter in 2024, and first-time buyer applications were the fastest-growing group, rising by a third

Despite this, calls for more support for first-time buyers are growing, as there remains a significant number of first-time buyers who need help getting on the ladder. In fact, searches for ‘first-time buyer schemes’ shot up by 5,000% within an hour of the election announcement

While there is more innovation in mortgages than ever before, the existing support available now is underused. One in five first-time buyers are unaware of available affordable home ownership schemes, while over 50% of first-time buyers are not using a Lifetime ISA despite them helping buyers purchase four years earlier.

If this sounds like you, you’re in the right place

Tembo is an award-winning mortgages and savings platform on a mission to help first-time buyers, movers & remortgagers make home happen. In fact, on average our customers boost their affordability by £82,000. So they can overcome the affordability gap to get on the ladder, stay on it or move up it. Discover your options for free by creating a mortgage recommendation today.

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