Having secured a significant majority in last week’s election, holding 411 seats in the House of Commons, Sir Keir Starmer and Chancellor Rachel Reeves now hold the keys to your finances.
Immediate changes straight off the bat are unlikely as Labour has ruled out an early Budget. Yet reforms could be on the horizon.
Voters were told throughout the campaign trail that there would be no tax rises for working people.
But with Labour’s cabinet confused as to what defines a “working person”, the path may well be cleared for a raid on savings and pensions.
As for mortgages, rates are due to slowly retreat with or without Labour’s help.
Capital Economics, a consultancy, believes that Labour is to “benefit from a combination of lower inflation, lower interest rates and faster economic growth than most are expecting”.
It forecasts inflation to drop to around 1.5pc by the end of this year, “prompting the Bank of England to cut interest rates from 5.25pc to 3pc next year, rather than to 4pc as investors expect”.
Here Telegraph Money outlines what could be in store for mortgages, savings and pensions with a new government in power.
Mortgages
Following three years of mortgage misery, Labour looks on course to inherit an easy win with mortgage-holders as interest rates begin to fall later this year – potentially as early as next month.
Things however aren’t set to be rosy red.
A return to the ultra-low mortgage rates seen in 2021 is unachievable, with the chief executive of Lloyds Banking Group last week predicting that 3.5pc to 4.5pc will become the “new normal” for mortgage rates.
In the scenario of a 4.5pc average, a mortgage-holder with 25 years left on a £300,000 loan would be £257 better off each month compared with the current average of 5.95pc.
But such a scenario may never come to fruition due to Labour’s proposals to introduce a “genuine living wage”.
