The average borrower will pay ‘an extra £500’ per month on their mortgage that could rise to ‘up to £900’ in some parts of the country, according to new Labour party analysis.
The claims from Labour are based on the fact that, in summer 2020, the average two-year fixed rate mortgage had an interest rate of 1.6 percent and monthly repayments of £1,057 a month. Should interest rates on those mortgages hit six percent, as financial research service Moneyfacts says happened for the first time in 14 years this week, then that would mean repayments would rise to £1,550 - a monthly increase of £498, Labour says.
Outlining her party’s analysis was Wigan MP Lisa Nandy, appearing on Sky News this morning (October 6). She also accused the Conservative government of ‘crashing the economy, pouring fuel on a global crisis, and working people are paying the price’.
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Ms Nandy, the shadow Levelling Up Secretary, also called on the Conservatives to ‘go back to the drawing board’ on their economic plans. She said that ministers should ‘reverse the mini-budget’, which has caused economic instability in the UK since its unveiling at the end of last month.
“The average extra payment [will be] £500 and could be up to £900 in parts of London and the south east,” she said. “The government has got to reverse the mini-budget which is what has caused huge instability in the markets. It’s meant mortgage products have been withdrawn and mortgage lenders have been pricing in higher interest rates.”
Ms Nandy also warned that rising interest rates and a cut in stamp duty could lead to first-time buyers being priced off the property ladder, which may in turn create a huge house-building slowdown. She continued: “What is going to happen is that property developers are going to sit on their land rather than build on it because people cannot get a mortgage so there’s no market. That’s going to worsen the housing shortage and push up house prices.
“They have cut stamp duty. The last Chancellor who did that — Rishi Sunak did that during the Covid pandemic — actually pushed up prices because sollers priced that into the cost of housing and it cut many more first-time buyers out.”
Labour’s analysis comes the day after Prime Minister Liz Truss named the party as one member of an ‘anti-growth coalition’ at her speech to the Conservative party conference in Birmingham.
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