Mortgage experts are warning that homeowners could face a short-term increase in mortgage rates if Andy Burnham replaces Keir Starmer as prime minister, as markets react to political uncertainty.
However, brokers say rates could ease over the longer term if a new leader in government reassures investors with credible tax, spending and borrowing plans.
Burnham won the Makerfield by-election by a large margin, beating Reform’s Robert Kenyon by more than 9,000 votes. He is now being viewed as a serious contender for the Labour leadership and could become prime minister within weeks if he secures enough support from Labour MPs.
Political changes do not directly set mortgage rates, but they can affect market confidence. If investors believe a new government will keep borrowing and inflation under control, gilt yields and swap rates may fall, giving lenders more room to cut fixed-rate mortgage deals.
If markets fear higher spending, higher borrowing or unclear funding plans, those rates can rise.
