Keir Starmer resigns: What it means for UK mortgages, pensions and household budgets

Keir Starmer has this morning announced his resignation as leader of the Labour party and as UK Prime Minister.

Andy Burnham now looks set to take his place.

The move paves the way for major changes to UK household budgets and could affect everything from mortgage rates to pensions and savings.

Here we explain what you need to know...

What does Keir Starmer's resignation mean for the economy, mortgages and interest rates?

When there’s a shift at the top, financial markets start trying to “price in” what might happen next. That includes looking for clues on government spending plans, tax policies, borrowing levels and predicted economic growth.

Of course, the big unknown is the exact direction a new Prime Minister will take the economy in.

Until this becomes clearer, we’re likely to see some volatility.

In reaction to the news of Keir Starmer resigning, the pound has dropped and UK-focused stock prices have taken a dip.

Falling investments can knock the value of pensions but there is no need to take immediate action as values could quickly bounce back.

It looks as though Andy Burnham is destined for the top job and he has been making an effort to show that he is going to tackle the issue of government borrowing.

Susannah Streeter, chief investment strategist, at savings platform Wealth Club, said: “While some uncertainty may be easing as Burnham's path to Number 10 appears increasingly clear, he’s an unproven economic force and so uneasiness looks set to linger.

“Andy Burnham has tried to reassure markets by signalling that he will largely stick to fiscal rules and take a more cautious approach to spending.”

Will there be further cuts to UK benefits under Andy Burnham?

Early indicators look as though Andy Burnham will continue Keir Starmer and Rachel Reeves' work on tackling the UK’s benefits bill.

He has previously hinted that welfare reform should focus on helping more people into work.

This could mean major changes to the benefits and who can qualify but any changes would likely take months – or even years – to come into play.

In the mean time, qualifying criteria is set to remain the same.

What will Andy Burnham’s policies be on pensions and the triple lock?

The triple lock refers to the current government policy which promises to raise state pension payouts by the highest of earnings growth, inflation or 2%.

We know that Andy Burnham has pledged to keep the triple lock in place if he were to become prime minister.

He has also said that he'd introduce tax cuts for pensioners. However, if he wants to implement this policy he will need to raise the cash in another way if he wants to stick to keeping government spending under control.

This could mean tax rises in other areas, but the detail on his plans will remain to be seen.

What impact will Andy Burnham have on mortgages and house prices?

The Prime Minister does not directly influence mortgage rates and home values, however, their policies can have a big impact.

From previous comments we know that Andy Burnham has fairly strong views on housing.

Nicholas Mendes, mortgage technical manager at broker John Charcol, said: “He has floated replacing stamp duty and council tax with an annual proportional property tax, which would change how people think in higher-value areas in particular, a recurring yearly bill instead of a one-off cost when you buy.

“Scrapping stamp duty cuts the other way, though, and could get more people moving and shorten chains.”

The chancellor is typically the government minister responsible for the exact details on government spending and economic policies.

And it remains to be seen exactly who Andy Burnham would give the job to.

For anyone who is coming to the end of a fixed term mortgage deal in the coming months, there are steps you can take to reduce the risk of being caught out by rising rates.

Many lenders allow borrowers to secure a new deal up to six months before their current mortgage ends.

This means you can lock in the lowest possible rate now and switch to a better rate if costs come down over the coming months.