No fears for Labour pain on inflation

MORTGAGE holders do not have to worry about a Labour Government sparking a new upsurge in inflation, economists said after the party's landslide election victory.

Inflation has fallen fairly rapidly over the last few months, hitting two per cent in June.

As a result, markets expect the Bank of England to start cutting interest rates in the near future, either in August or September.

Minutes from the most recent meeting in June showed that it was a "finely balanced" decision, which suggested that the Monetary Policy Committee (MPC) is readying a cut.

And with traders pricing in two rate reductions over the remainder of the year, mortgage rates have moved lower. Figures out just last week showed that the effective interest rate on new mortgages was 4.79 per cent in May, down from 5.19 per cent at the beginning of the year.