It's been a big week in Westminster, and while politics isn't really our beat here, this one has a direct line to mortgage rates, so it's worth explaining calmly. We'll leave the party-politics to one side and just look at what actually happened and what, if anything, it means for your money.
A new Prime Minister, and why the markets moved your mortgage Confirmed
On Monday 20 July, Andy Burnham became Prime Minister, taking over from Sir Keir Starmer, who stepped down as Labour leader last month. Burnham was appointed unopposed, and one of his first moves was to name John Healey as Chancellor, replacing Rachel Reeves. For most of us, a change at the top feels like distant news. But the mortgage market paid very close attention, and here's the part that matters for borrowers.
In his first days in office, the new PM signalled that his government would seek more "flexibility" within the fiscal rules, in plain terms, room to borrow and spend a bit more. Financial markets don't love uncertainty about government borrowing, and they reacted almost immediately. The yield on 30-year UK government bonds (gilts) rose to around 5.75%, its highest level in about two months, and the closely watched 10-year gilt yield pushed back above 5%.
Why should that matter to you? Because fixed mortgage rates aren't set by the Bank of England's base rate, they're priced off swap rates, which move in step with gilt yields and market expectations for interest rates. When gilt yields climb, swap rates tend to follow, and lenders reprice their fixed deals to match. That's a big part of why several lenders have nudged their fixed rates up by as much as 0.35 percentage points over recent weeks, the political shift landing on top of the oil-price pressure from the ongoing Middle East conflict we covered last week.
There was some better news for household budgets in the mix. At his first cabinet meeting, Burnham announced that VAT on domestic electricity bills will be cut from 5% to 0% from 1 October, running for six months to the end of the financial year. The government says it should take around £45 off the typical annual energy bill, and suppliers will apply it automatically, you won't need to claim anything. It applies to electricity rather than gas, but lower energy costs also, in theory, take a little heat out of inflation, which is the thing that ultimately drives rates.
And on that, a genuine bright spot: inflation actually fell to 2.6% in the year to June (down from 2.8%), mostly thanks to cheaper fuel. So here's the slightly maddening picture, inflation eased, which would normally point to cheaper mortgages, yet fixed rates went up, because the political and geopolitical uncertainty pushed swap rates the other way. It's a good reminder that no single headline number decides where your rate goes.
What it means for you: nothing here changes the rules for a mortgage you're arranging today, and there's no need to react to the political drama. But it does reinforce the same practical point: rates can move meaningfully within days, in both directions. If you're within about six months of needing a new deal, there's a strong case for reserving a rate now, most lenders let you switch to something cheaper before completion if rates fall, so you protect yourself against a rise without giving up the upside. Our guide to what happens when your fixed rate ends and the repayment calculator can help you weigh it up. (One to note for the diary: the Bank of England's next base-rate decision lands on 30 July, we'll cover the outcome next week.)
That "scrap stamp duty" idea in the headlines, what's really going on Proposed idea only
Alongside the change of PM, you may have seen headlines about replacing stamp duty and council tax with a new annual property tax, sometimes called a "land value tax" or a "proportional property tax". It's a genuinely interesting idea, and worth understanding, but there's a lot of hype around it, so here's the honest version.
First, it isn't a new invention, and it isn't yet a policy. Taxing land rather than transactions is an idea economists have debated for over a century, and the specific "one annual charge instead of council tax and stamp duty" version comes from a long-running campaign group. The new PM has championed it before, arguing that property and land in the UK are "undertaxed", which is why it's suddenly in every headline. But as things stand there is no bill, no consultation, and no costing, and his first speech as PM contained no specific tax commitments at all.
The version most often quoted would charge roughly 0.48% of a property's value each year in place of council tax and stamp duty, with a higher rate on second homes, empty properties and overseas buyers. In theory that would remove the big upfront stamp duty bill when you buy, which could help movers and first-time buyers, but you'd instead pay an ongoing annual charge based on your home's value, so it's a genuine trade-off, not a simple giveaway.
What it means for you: for now, nothing changes. Stamp duty and council tax are still very much the rules today, and any reform this big would have to go through a Budget (complete with independent forecasts, which need weeks of notice), so even on the fastest timetable we're talking years, not months, and it may never happen at all. It's worth being aware of as a direction of travel, but nobody buying, moving or remortgaging in 2026 should plan around it. If you want to know your actual bill under today's rules, our stamp duty calculator works it out.
Self-employed? The safety net nobody sets up for you
This week's homeowner note is for the roughly 4.4 million self-employed people in the UK, a record high, and anyone thinking of going it alone. When you work for yourself, you get freedom and flexibility. What you don't get is a safety net if illness or injury stops you working, and that's a gap a lot of people don't spot until it's too late.
Here's the bit that surprises people: if you're self-employed, you cannot claim Statutory Sick Pay. SSP (currently £123.25 a week) is only for employees on a payroll. There's no employer to keep paying you, and no "death-in-service" cover either. If you can't work, the main fallback is a state benefit called New Style Employment and Support Allowance, which is modest, so in reality it's your savings doing the heavy lifting until you're back on your feet. For most self-employed homeowners, that's the same savings pot that's meant to cover the mortgage.
That's exactly the gap income protection insurance is designed to fill. In plain English:
- What it does. It pays you a regular monthly income, usually a percentage of your normal earnings, if you can't work because of illness or injury, and it keeps paying until you recover, retire, or the policy ends, so it can cover you for the long haul, not just a few weeks.
- The "deferred period" is the key choice. That's the waiting time between stopping work and the payments starting. An employee with months of company sick pay can pick a long wait and pay less. If you're self-employed with no sick pay at all, your savings are the only bridge, so a shorter deferred period (say 4 to 8 weeks) often makes more sense, even though it costs a little more.
- It's built around your mortgage and bills. The goal isn't to replace every penny you earn, it's to make sure the mortgage, the food shop and the direct debits keep getting paid if your income suddenly stops.
- Sooner is cheaper. Premiums are largely based on your age and health, so cover generally costs less the younger and healthier you are when you take it out.
Where DS Financial fits: working out the right amount of cover, the right deferred period, and a policy that actually pays out for your line of work is exactly what Debbie at DS Financial can help with, and it's genuinely important to get advice here, because the small print (how "unable to work" is defined) varies a lot between insurers. If you're self-employed and have never put a safety net in place, it's worth a no-pressure conversation, just drop her a line. (Income protection is a regulated insurance product, figures here are general information, not a personal recommendation.)
That's your week, a new face at Number 10, a big tax idea to keep half an eye on, and a nudge for anyone working for themselves. If anything here raises a question about your own situation, just drop us a line, or have a no-pressure chat with Debbie at DS Financial.
General information, not financial, tax or legal advice. Figures correct at the time of writing (25 July 2026). Government tax proposals referred to here are proposals only and not current law.
Sources: Andy Burnham appointed Prime Minister, 20 July 2026 (national news coverage), ITV News, "Andy Burnham announces tax cut on energy bills from October", 21 July 2026, Bloomberg, "Gilts Fall as Burnham's Fiscal-Flexibility Comments Spook Market", 20 July 2026, ONS, Consumer price inflation, UK (June 2026), GOV.UK, Statutory Sick Pay (eligibility and rates), GOV.UK, New Style Employment and Support Allowance, ONS, self-employment in the UK labour market, GOV.UK, Stamp Duty Land Tax rates.