What does a new Labour Government mean for the equity release market?
With Labour winning 411 seats of the 650 available in parliament, it has given itself a majority of 172 seats. So, what does this massive shift in the “working majority” mean for the Equity Release market?
Stability To The Financial Markets
With the electoral outcome now decided it has given some stability to the political status and in turn, this should ripple through to the financial markets. Knowing who is in power, and which manifesto is being adopted, can allow for better planning. Of course, many of these actual decisions are still to be formally put into practice but, simply now knowing who is making these decisions is a major contributing factor.
Install Confidence Into the Financial Market
For many the change of political power will now bring with it the confidence that the economy will get itself back on track. With things looking to be heading in the right direction under the Conservative watch, Labour can now look to build on this. In turn, confidence should not only return to the markets but also to lenders and the general public. Confidence breeds confidence. If the signals are that confidence is returning to the economy and in turn the financial markets, we can all feel more confident about the future of our own financial position.
Will interest rates fall?
Bank of England’s base rate is at its highest level for 16 years. This in turn has meant an increase in borrowing rates, including those for equity release. Many question why interest rates have not already been reduced with the current economic outlook. With high borrowing interest rates, when added to the other increases in the cost of living putting a stretch on finances, a drop would be welcomed by many. It is highly anticipated that one or more base rate reductions will happen before the end of the year. Should this be the case, borrowing rates in turn should fall making equity release an easier life choice to make for those that need it.
What will happen to property prices?
With the two main stipulations for equity release being the age of the applicants and the loan to value, it is no surprise that property prices are of high importance. Not simply when taking the loan out but also for the confidence of what may happen to your equity post completion. Interest rates and the cost of living have played their part in the housing market. Less people are looking to buy a new home and in turn property prices have stalled. What has not happened however is a massive drop in prices. Demand still sits in the background and whilst not as many people are currently buying, the need for housing still outstrips supply. The general consensus therefore being that prices will continue to hold steady and possibly start to see values rise when interest rates start to fall.
Should you take out an equity release loan?
There are many reasons why people consider equity release. Why, when and if you decide to take out an equity release loan can only be decided by you. Arguably the lower borrowing rates become, the lower your interest costs should be. However, basing your decision on when to proceed solely on interest rates could be detrimental to your overall financial position. There are of course never any guarantees that just because base rate falls that equity release rates will follow suit. Yes, it will likely play its part but other factors such as demand, lenders appetite and the money markets will all have an impact. We always strongly recommend you seek professional advice when considering a major financial decision such as equity release, you can always check out the Equity Release Explained section of our website, in particular, our guide on ‘Is Equity Release Safe?’ to help you when making the desition to take out an equity release loan. Contact us here at Premier Equity Release and one of our qualified advisers will happily discuss your possible options.
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