Homeowners are being hit with a “mortgage penalty” of £7,000 per year as interest rates have tripled compared to what they were two years ago. Pat McFadden, shadow chief secretary to the Treasury, blamed what he called the “reckless economic gamble” taken by the Conservatives during September’s mini-Budget, PA reports.
Liz Truss became the shortest-serving prime minister in modern British political history after the fallout from her and then-chancellor Kwasi Kwarteng’s so-called Growth Plan that sent the value of the pound tumbling and mortgage rates soaring. Analysis by Labour suggests the average homeowner is forking out an extra £150 every week since what officials called the “kamikaze mini-Budget” in the autumn.
It means the average household with a mortgage now pays £223 a week in mortgage interest payments – an increase of £7,000 per year, party officials said. Labour said those with a 75% loan to value (LTV) ratio mortgage faced average interest rates of up to 4.63% in April.
The same deal had an interest rate of 1.49% in April 2021, said the party – a third of what it increased to 24 months later. Financial information website Moneyfacts said it had seen several mortgage providers raising rates last week.
Mr McFadden said: “Britain’s homeowners continue to suffer thanks to the Tories’ reckless economic gamble. This Tory mortgage penalty has increased the cost of home ownership by thousands of pounds a year, causing huge worry for families, while putting the prospect of owning a home further out of reach for many others.
“(Prime Minister) Rishi Sunak might want to forget the economic misery the Conservatives have inflicted, but the public can’t forget about it as their outgoings soar. Labour will make our economy stronger and more secure, and stop working people paying the price for 13 years of Tory failure.”
It comes as some mortgage lenders temporarily pulled some products from the market last week. On Thursday, HSBC UK said it had temporarily removed some products so it can “stay within operational capacity”.
Nationwide Building Society, Britain’s biggest building society, said it needed to increase fixed rates to ensure they remain sustainable. On Thursday, the average two-year-fixed-rate mortgage rate on the market across all deposit brackets was 5.82%, according to Moneyfacts’ figures, up from 5.49% at the start of June.
The average five-year fixed-rate mortgage on the market on Thursday was 5.49%, up from 5.17% on June 1.
