How will the snap election impact specialist lending?



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At a time when post-referendum uncertainty appeared to be receding, Prime Minister Theresa May has prompted yet another set of questions over the future of the UK economy.

Mrs May’s decision to hold a snap election on 8th June could lead to drastic changes in policy should the Conservatives fail to secure what to some already appears to be a landslide victory.

With the potential for new directions in housing, taxation and foreign trade, to name but a few, some in the specialist lending sector have voiced concerns over whether borrowers could be deterred by the threat of economic upheaval.

“With recent polls placing the Conservatives in double-digit leads over rival parties, and the initial flickers of a blue resurgence in Scotland and Wales, the conventional wisdom among most observers is that there is unlikely to be any significant change to the status quo,” explained Henry Wilson-Holt, loan origination executive at Zorin Finance.

“However, this era is the era of political upsets, and there are many who have been recently burned by adhering to convention wisdom.

“The tangible potential for the inconceivable to be conceived, coupled with the close proximity of the election date, means that it is likely that many will see little drawback to waiting for a couple of weeks for more clarity.”

By contrast, Benson Hersch, CEO of the ASTL, was less convinced the election would have a tangible impact on borrowing.

“…In isolation, the snap election will have no clear positive or negative effect,” Benson insisted, “unless, of course, there is a major wobble in support for the Conservatives, although this seems unlikely.”

Theresa May
Many expect Theresa May to retain her position as prime minister

Gary Bailey, sales director for Together, was even more optimistic, branding the election effect as “overstated” and citing a rise in the number of mortgage applications prior to the 2015 election.

“It also seems difficult to imagine a scenario where people who have been carefully saving for deposits for years to buy a house will suddenly shelve their plans to move until after a general election.

“We may, in fact, see a surge in applications as people continue to make the most of advantageous borrowing conditions, with interest rates at record lows, holding down the cost of mortgage payments.”

‘It is unlikely that the residual after-tremors of a snap election will move mountains’

The upcoming election is the latest in a string of polarising events, with both the UK and the wider world having been divided over issues such as Brexit, Donald Trump and the potential for a second Scottish independence referendum.

Although the addition of a general election to the mix may seem one step too far, Henry claimed such events may have desensitised the market to any further political uncertainty.

“The twin meteoritic shocks of the EU referendum result and Trump election only mildly registered on the economic Richter scale, and so it is unlikely that the residual after-tremors of a snap election will move mountains,” stated Henry.

“With the political compass spinning so chaotically, its usefulness as a navigational tool is no longer considered to be what it was.

“As such, more and more investors and developers will be looking for clarity in the fundamentals of deals and projects themselves, rather than attempting to time their actions to the sound of political musical chairs.”

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