Rishi Sunak is facing a wipeout in the Tories’ “blue wall” seats in the south of England over a backlash from mortgage holders hit by soaring borrowing costs.
Constituencies in the south-east are set to feel the worst of the pain from rising interest rates, with chancellor Jeremy Hunt facing a fight to hold onto his own seat in Surrey.
Mr Hunt is refusing to offer support for homeowners struggling with mounting costs, despite growing pressure from Tory MPs to act quickly on the mortgage “time bomb”.
The most vulnerable areas to crippling re-mortgaging rates are largely concentrated in the south-east, according to new Labour analysis.
There are 11,600 mortgage holders in Mr Hunt’s own South West Surrey seat, with families in the area facing an average increase of £5,600 a year on their housing costs.
East Surrey, Esher and Walton, Epsom and Ewell and South West Hertfordshire are among the other Tory-held blue wall seats where more than 10,000 households face increased annual mortgage costs exceeding £5,000.
Analysis shows that there are 121 Tory-held seats in England and Wales – one in three – where the number of mortgage holders exceed the party’s majority. Seats in the Midlands and north west are vulnerable to a homeowner backlash, as well as the south-east.
Mr Sunak faces a series of gruelling by-elections in Uxbridge and South Ruislip, Mid-Bedfordshire and Selby and Ainsty after Boris Johnson and two of his closest allies quit their seats. David Warburton, accused of drug use and sexual misconduct, added to the PM’s woes by resigning in Somerton and Frome.
In Mr Johnson’s old seat of Uxbridge, the mortgage time bomb looks set to be at least as big an issue as Partygate. Some 10,100 households will be paying on average £5,200 more for their mortgage costs.
Sir Jake Berry, former Tory chairman, exposed the Tory split on whether the government needs to offer support to mortgage holders – calling in the Commons for action on “the mortgage bomb about to go off”.
Urging Mr Hunt to bring back Thatcher-era mortgage interest tax relief, Mr Berry said: “If we don’t help families now, all the other money that we have spent to help them will have been wasted if they lose their home.”
But Mr Hunt said it would be “inflationary” in to inject more cash into the economy. The Treasury has reportedly put the cost of bringing back the mortgage tax relief scrapped by Gordon Brown at £4bn.
Wednesday’s inflation figures – showing price rises stuck at the higher-than-expected rate of 8.7 per cent – will add to pressure on Mr Sunak and Mr Hunt.
The chancellor backed the Bank of England’s interest rate hikes, with the central bank expected to raise the base rate yet again on Thursday. “We need to squeeze every last drop of high inflation out of the economy,” said Mr Hunt – saying the latest figures “strengthen the case for the government to stick to its guns”.
The average 2-year fixed residential mortgage rate is now at 6.15 per cent – up from 6.07 per cent on Tuesday, according to Moneyfacts. Experts have warned that the pressure on Britons’ mortgage costs is set to last until 2025.
Rachel Reeves, Labour’s shadow chancellor, made clear Keir Starmer’s party would push the issue of the “Tory mortgage penalty” at the by-elections and in the run up to next year’s general election.
“Each and every family know who is responsible for trashing the economy: the Conservative party. Will the chancellor apologise for the harm that his government have caused with the Tory mortgage penalty?”
Tory peer Lord Hayward told The Independent that Mr Johnson’s Partygate legacy “may hang over the by-elections” – but the mortgage crisis could be a bigger factor.
“It doesn’t help,” said Lord Hayward on the recent trouble caused by Mr Johnson. “There’s no doubt it will feature on some [opposition] campaign leaflets. But for many people who have moved on, it will be interest rates and other issues that will be more important.”
Mr Hunt will summon bosses from Britain’s top banks to Downing Street for a summit at which he will urge them to do more to support customers.
The chancellor will ask on Friday what help banks plan to give to those unable to keep up with higher mortgage payments, as well as what “flexibilities” they will offer to families in arrears.
