More than a million homeowners in London and the South East are facing higher mortgage bills
(Picture: Daniel Lynch)More than a million homeowners in London and the South East are to be hit with higher mortgage bills by the end of next year, a new analysis revealed on Friday.
It showed the scale of the mortgage blow to the capital and commuter communities after the Bank of England’s Monetary Policy Committee hiked interest rates by 0.75 per cent to three per cent on Thursday.
More than 200,000 London homeowners were estimated to now be facing an immediate rise in their mortgage payments as they are on variable rates.
A further 251,000 are in line for a mortgage bill increase by the end of 2023 when their fixed rate period will have finished.
Boroughs with the most homeowners affected by mortgage payments going up include Barnet, Bexley, Bromley, Croydon, Enfield, Havering, Hillingdon, Lewisham, Redbridge and Wandsworth, according to the analysis by the Labour Party.
Across the wider South East, 252,000 homeowners on variable rates will see their mortgage bills go up shortly, with a further 315,000 by the end of next year as they come off their fixed rates.
London Mayor Sadiq Khan said: “Londoners are paying the price for the Tories’ catastrophic management of our economy.
“With prices rising and energy costs soaring, this interest rate hike will leave Londoners worried about keeping their homes.”
Government minister Chris Philp, MP for Croydon South, stressed that many of the factors fuelling inflation and hitting the economy were global ones including Vladimir Putin’s war in Ukraine and the aftermath of the Covid pandemic.
Brexit is also damaging the UK economy, according to former Bank of England governor Mark Carney and many other experts.
Mr Philp, who was a Treasury minister in the 50-day Liz Truss government, refused to apologise for the blunders of the September 23 mini-Budget which sent the Pound into a nosedive, as well as pushing up the cost of Government borrowing and mortgage rates.
He said: “The decisions around the mini-budget were taken principally by the then-Prime Minister and to a lesser extent the then-Chancellor (Kwasi Kwarteng).”
The Labour analysis used ONS figures on mortgages by local authority, and Bank of England estimates that some 20 per cent of mortgage holders are on variable rates, and around 25 per cent are on fixed rates that end by December 31 2023.
A separate study by the Liberal Democrats highlighted how constituencies in the so-called Tory “Blue Wall” in southern England will be hard hit by rising mortgages given the high level of property prices.
Their figures showed that a homeowner in Harpenden, where the average house price is £928,000, faces a mortgage bill increase of £12,230-a-year, if they had a loan-to-value ratio of 80 per cent and their two-year rate increased from 4.24 per cent in September to 6.55 per cent now.
For Esher, where the average house price is £976,000 the increase would be £12,863, for Wimbledon where the average house price is £805,480 it would be £10,606, Amersham with an average house price of £760,000 the rise would be £10,013, and Cheltenham with an average house price of £378,500 an increase of just under £5,000.
Liberal Democrat leader Sir Ed Davey, MP for Kingston and Surbiton, said: “People who have finally got themselves onto the housing ladder in London and the South are now being clobbered with this grossly unfair mortgage rise.”
The 0.75 per cent rate rise was the biggest rise since 1989 and came with a dire warning from the Bank that Britain was at the start of a two-year recession, which would be the longest on record.
The bitter economic medicine came as the Bank battles to control runaway inflation, currently around ten per cent.
But in a glimmer of good news, analysts are now predicting interest rates could reach 4.75 per cent next year, down from forecasts after the disastrous mini-budget of more than six per cent.
The top 10 London areas most affected by increasing mortgage payments
London area |
Number of mortgage holders |
Number of mortgage holders on variable rates |
Number of mortgage holders on fixed rates finishing by end of 2023 |
Barnet |
48,452 |
9,690 |
12,113 |
Bexley |
38,290 |
7,658 |
9,572 |
Bromley |
51,177 |
10,235 |
12,794 |
Croydon |
54,806 |
10,961 |
13,701 |
Enfield |
40,858 |
8,172 |
10,214 |
Havering |
42,707 |
8,541 |
10,676 |
Hillingdon |
38,678 |
7,736 |
9,669 |
Lewisham |
38,189 |
7,638 |
9,547 |
Redbridge |
37,679 |
7,536 |
9,419 |
Wandsworth |
39,771 |
7,954 |
9,942 |
