Mortgage rates could be set to dip even further off the back of the Conservative majority win in the election, says Capital Economics.
Both mortgage rates and base rate are at record lows but CE, an economics consultancy firm, believes continued fiscal austerity could see rates dip further.
CE property economist Matthew Pointon says: “The fiscal austerity implied by a Conservative administration is likely to allow interest rates to stay lower for longer. That could allow for a further dip in already record-low mortgage rates.”
Pointon says the slump in the prime London housing market may reverse now that the prospect of an annual mansion tax on homes worth £2m and over, which was supported by Labour and the Liberal Democrats, has faded.
He adds: “Sales in the prime central London boroughs of Westminster and Kensington & Chelsea were down 9 per cent in the 12 months to January. A rebound in activity can therefore be expected as buyers who had delayed return to the market.”
However, he says that reform of stamp duty, which has seen tax collected on homes worth over £1m increase, could see prime central London house price inflation limited to 5 per cent this year.
Earlier this month, Mortgage Strategy reported that experts believed the housing market had “dodged a bullet” after the UK avoided voting Labour into power.