John McDonnell (main picture), the former Labour shadow chancellor, effectively called for the removal of Prime Minister Keir Starmer yesterday – a move that would undoubtedly cause chaos for the mortgage market.
Writing in The Guardian, McDonnell, now the independent MP for Hayes and Harlington, delivered a blistering critique of Keir Starmer’s Labour government, accusing it of betraying the party’s founding principles.
He condemnd the abandonment of radical policies; the enforcement of the two-child benefit cap; welfare cuts, and cosy ties with corporate donors.
McDonnell argued that Labour’s current leadership is not merely timid but actively reversing social justice gains.
And while he stopped short of explicitly calling for the removal of the Prime Minister he wrote: “Unless party members, affiliated unions and MPs stand up and assert themselves to take back control of Labour, in the next period of its history we may not only lose a government. We could also lose a party.”
CONFIDENCE KILLER
But removing the Prime Minister could be disastrous not only for the UK mortgage market but hundreds of thousands of borrowers – not to mention savers.
Volatility in the financial markets would likely cause interest rates and borrowing costs to fluctuate while political confidence could hamper lender confidence, potentially leading to stricter lending criteria and a blow to first-time buyers.
CONSUMER CONFIDENCE BLOW
A sudden leadership change could also dampen consumer confidence, causing potential homebuyers to delay purchases – leading to a slowdown in housing market activity.
One City insider, who asked to remain anonymous, tells Mortgage Soup: “As much as the trend seems to be swinging against him [Keir Starmer] at the moment this would trigger significant political uncertainty and uncertainty in financial markets.
“The UK mortgage market would likely see immediate volatility. Gilt yields could spike as investors demand higher risk premiums, pushing up fixed-rate mortgage costs.
“That could also lead to lenders tightening credit conditions, wary of economic instability and reducing mortgage availability.
“It’s carnage that we just don’t need at the moment – if ever!”
