This is the overwhelming message from mortgage experts who have been responding to the PM’s announcement in Downing Street this morning he is to stand down as Labour leader.
The pound has fallen slightly following the announcement, which has come as little surprise to the markets.
But whilst the Prime Minister’s resignation, following weeks of speculation, will offer some certainty to the markets – there is set to be more uncertainty ahead as we await Keir Starmer’s successor and more detail on their fiscal policy.
Here’s more about how this may impact your mortgage rates both now and in the next few months.
How does Keir Starmer’s resignation impact mortgages?
Fixed rate mortgages, which are the most popular type of mortgage product, are priced using Swap rates, and these are impacted by the economic and political climate.
Immediately after Keir Starmer’s speech the pound fell and Swap rates inched up. The announcement had been expected, so these moves were not significant.
But it is how things proceed when the new PM – expected to be Andy Burnham, the newly-appointed MP for Makerfield – takes their position that will have a greater impact on mortgage pricing going forward.
Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “Episodes of political volatility tend to push up borrowing costs as investors demand a greater premium for perceived risk.
“Much will now depend on the fiscal policies put forward by future PM apparent Andy Burnham and anyone else vying for the Labour leadership, particularly their approach to taxation and public spending.”
What will the immediate impact be on your mortgage?
There is likely to be little change in the short term for mortgages following today’s announcement by Keir Starmer.
Some experts think the increase in Swap rates may mean recent mortgage rate cuts will come to an end. But others think it will make no difference in the short term.
Richard Davidson, mortgage advisor at onlinemortgageadvisor.co.uk, speaking to the Newspage Agency said: “A change of Prime Minister grabs the headlines, but it doesn’t change anyone’s monthly mortgage payment overnight.
“What actually moves rates is whether the markets stay calm during the handover, and the early signs are that everyone in the running has learned the lesson of 2022 and won’t go near an unfunded budget that spooks lenders.
“The base rate held at 3.75% last week and fixed deals have been slowly edging down, so an orderly transition should keep that gentle downward path on track.”
What’s the advice to borrowers looking for a deal now?
Being ‘between PMs’ could feel uncertain for home movers and those looking for a remortgage as it is now unclear what will happen to housing or fiscal policy.
However, the advice from mortgage experts is to focus on your own plans, rather than be guided by politics.
Indeed, Davidson added: “My advice to anyone buying or remortgaging is don’t sit on your hands waiting for political certainty, because it almost never arrives, line your deal up now and you can usually switch if something better lands before you complete.”
Adam French, echoed this advice. He said: “For those due to get a new mortgage later this year, there are steps they can take to reduce the risk of being caught out by rising rates.
“Many lenders allow borrowers to secure a new deal up to six months before their current mortgage ends, providing valuable protection should uncertainty push rates higher in the meantime.
“If rates do fall, borrowers can usually switch to a cheaper deal before completion without penalty.”
What could happen to mortgages if Andy Burnham becomes PM?
For anyone considering the longer-term outlook on the mortgage and housing market, what would the appointment of Andy Burnham as Prime Minister mean?
The new MP for Makerfield is thought to be in favour of scrapping stamp duty – something which could provide a real boost for the housing market.
On the other hand, Burnham is likely to come under great scrutiny from investors, which could spook the bond markets. Who he appoints as Chancellor will also be crucial.
Riz Malik, independent financial adviser at Southend-on-Sea-based R3 Wealth, speaking to Newspage, said: “If Burnham comes in and sets out a timetable for stamp duty reformation, then the housing market may be reignited. Without this, he carries a greater risk that a negative bond market reaction could impact mortgage pricing.”