“Burnham has previously made comments about not being a slave to the bond markets, but we suspect he will have to row back on that once he is prime minister,” he said. “If talk of further borrowing in his speeches comes to pass, gilts and bonds will become more expensive, leading to higher swap rates and accordingly mortgage rates.”
Harris also highlighted the significance of the Chancellor appointment, a role currently held by Rachel Reeves. “The markets will also be nervous about the next chancellor. They are comfortable with Reeves, but should a more left-leaning PM and chancellor be installed, this will have an upwards impact on pricing.”
Housing market confidence
Beyond rate pricing, industry figures warned the leadership transition risks compounding an existing confidence problem in the housing market.
Jeremy Leaf, a north London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors (RICS), said the priority must be a swift and stable handover.