Mortgage rates have shot up across the country in the past year, with particularly sharp increases following the disastrous mini-budget that led to the end of Liz Truss’s short time as prime minister.
Annual repayment costs have risen by up to £13,980 in the most expensive areas – though households across the country are feeling the pinch.
The Bank of England warned in December that around half of households with a mortgage, a total of 4 million, will be exposed to rate rises this year when their fixed terms end.
Around 800,000 of those households will see their repayment rates double, according to the financial news site Bloomberg.
Analysis by the Labour Party has mapped the rise in repayment costs across parliamentary constituencies in England and Wales from last August, the month before the mini-budget, to last December.
In August, Moneyfacts said a typical two-year fixed mortgage rate was 3.95 per cent, but by January that had risen to 5.75 per cent.
The annual increases range from £950 in the County Durham area of Easington to £13,980 in London’s Kensington.
Sheffield Hallam saw a rise of £3,080, North East Derbyshire saw £2,070, Plymouth, Sutton and Devonport saw £1,850, Erewash in Derbyshire saw £1,830.
House prices have been falling since the end of summer. January saw a 0.6 per cent fall from December, according to figures from building society Nationwide.
Further falls are likely as the Bank of England is expected to push interest rates higher on Thursday for the 10th time in a row, pushing mortgage rates up further.
Higher mortgage rates tend to push house prices down as people are less willing to borrow money.
Some experts think the Bank is heading towards the end of its cycle of rate hikes, bringing some potential relief to strained borrowers.
The decision comes after Bank governor Andrew Bailey provided some optimism for the future of the UK economy as he insisted the country has turned a corner on rising inflation.
He said earlier this month that while Britain still faces a recession, it could be “shallower” than previously expected, indicating a less severe downturn.
On Tuesday, the International Monetary Fund (IMF) predicted the UK will be the only major economy to plunge into recession this year, with the economy set to contract by 0.3 per cent.
Chancellor Jeremy Hunt acknowledged the grim forecast but insisted the UK’s long-term prospects for growth are more promising.
Responding to Labour’s mortgage price analysis, shadow chancellor Rachel Reeves said: “The Tory mortgage penalty is devastating for family finances and is holding back our economy.
“The country is buckling under 13 years of Conservative mismanagement, and it’s families being asked to pay more on their mortgage once again.
“People are asking themselves whether they or their family are better off under the Tories. The answer is no.
“By stabilising the economy, making it stronger and getting it growing, Labour will stop us lurching from crisis to crisis, and make Britain thrive again.”
