Mortgage rates could be set to dip even further off the back of the Conservative’s majority win in the election, according to Capital Economics.
Both mortgage rates and base rate are at record-lows but CE, an economics consultancy firm, believes the Conservative’s plans to continue fiscal austerity could see rates dip even 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 van therefore be expected as buyers who had delayed return to the market.”
However, he says that reforms to stamp duty, which has seen the tax collected on homes worth over £1m increase significantly, could see prime central London house price inflation limited to 5 per cent this year.
Last week, Mortgage Strategy reported that experts believed the housing market had “dodged a bullet” after the UK avoided voting Labour into power.
The Conservatives achieved a comprehensive victory, winning 331 of the 650 seats being contested. Labour came second with 232 seats, followed by the Scottish National Party with 56, the Liberal Democrats with eight, Plaid Cymru with three, Ukip and the Green Party with one each and the other 19 seats going to a mixture of other parties.