The result of the General Election on 6 May will influence the Bank of England's monetary policy committee (MPC) when it meets days after the UK goes to the polls, according to Ray Boulger, senior technical manager at broker John Charcol.
"In view of the significant difference in the fiscal policies of the two main parties, and the impact these are likely to have on the markets, the future trend of the bank rate is very entwined with the political future of the UK," he said.
"Therefore, any lack of clarity on the make-up of the new parliament would make early discussions at the MPC meeting somewhat problematical."
Consequently, Boulger said, borrowers were being advised to account for the impact of the election when taking out a new mortgage.
"Anyone considering a new mortgage before the election should not ignore the political risk, not only because of the impact the result could have on interest rates but, perhaps even more importantly, also because of the impact the result will have on the UK economy."
Darren Cook, of Moneyfacts, urged borrowers to make any mortgage move before the election, with economic and political uncertainty favouring fixed-rate deals. "The odds are too high for a hung parliament and this will adversely affect the money markets, and the UK possibly losing its AAA status, which should result in rates increasing. We have seen some rates drop over the past few weeks and some may make a beeline for a five-year fixed rate."
But David Rolleston, director of Mortgage Advice Brokerage in Glasgow, said the election should not dictate borrowing decisions.
"As far as holding off is concerned, I think people need to look at their own circumstances – in particular, the type of work they do and who they are employed by," he said. "The big thing is not over-committing themselves if they think their position could be at risk. The vast majority of private sector workers have already gone through any pain during the last 24 months and things have very much settled down on that front."
Rolleston said those moving now could benefit from a raft of new mortgage deals launched this week, with four of the main players all reducing their rates.
The Post Office slashed rates for the fourth time this year, offering a market-leading 3.15 per cent for a two-year fixed-rate mortgage for borrowers with a 25 per cent deposit, while the Woolwich, owned by Barclays, is cutting its tracker and fixed-rate deals by up to 0.6 points for borrowers with 25 per cent to put down.
"This follows the fact that swap rates have been coming down over the last few months," said Rolleston. "On that basis, there is a compelling argument that now is the right time to make the move and secure a decent deal before the elections and while attractive mortgages are on offer."