One of the country’s leading independent mortgage brokers is warning that lending may be slower during the General Election campaign period – and that the Bank of England may defer any more to cut interest rates.

John Charcol mortgage technical manager Nicholas Mendes says: “During the run-up to an election, uncertainty about the future political landscape typically causes financial market fluctuations. This instability can prompt lenders to adopt a more cautious approach, potentially delaying significant rate reductions until the economic outlook becomes clearer.”

Mendes adds: “Once the election results are known, the outcome can either alleviate or exacerbate market uncertainties. A decisive victory and a clear mandate for the winning party often lead to increased economic confidence and stability, which, coupled with falling inflation and future bank rate reductions being priced into swaps, can positively influence financial markets and mortgage rates.”  

Financial analysts say that the calling of the General Election earlier than expected means that the chances of a June interest rate cut from the Bank of England has all but disappeared, and points to the Federal Reserve in the US – this is believed to be under scrutiny over interest rate movements even six months out from the US Presidential Election, and likely the BoE is believed to want to avoid any suggestion of playing politics.

Therefore the following opportunity – the August meeting of the Monetary Policy Committee – is likely to be the first time when a rate cut may be announced by the Bank.

Meanwhile Tim Bannister, Rightmove’s property expert, says the housing market, too, might slow. “It’s taking over seven months to move on average and we’re still seeing pent up demand from last year flowing through into 2024. This means that, for many, the desire to get on with moving is likely to outweigh waiting to see what new policies the government could bring in. 

“An election in the summer, when the market is traditionally slower, could have less impact on housing market activity than if one had been called for the Autumn. So, as we head towards this election, the housing market is likely to stay active, with activity ramping up once the election is over and things become clearer. It could mean that we’re gearing up for a stronger than usual August, especially if we see interest rates finally start to fall.”