Buyers' dreams 'go up' in smoke: Starmer's mortgage warning as homeowners 'face paying thousands more each year'
28 September 2022, 06:30 | Updated: 28 September 2022, 08:10
Sir Keir Starmer today told LBC he is "very concerned" about the rise in mortgage rates and revealed his own mortgage repayments have gone up by "a few hundred pounds".
He said his sister, a care worker, was struggling with energy bills with only a “small amount of money left in the bank.”
He said the government’s actions on the economy were “outside the normal to-and-fro of politics," adding the mortgage situation was causing “high anxiety” for millions of people and that the Tories have “lost control of the economy.”
His comments come after banking experts warned homeowners face mortgage chaos with fears interest rates could reach 5.5pc by November.
Hundreds of mortgage deals have been pulled from the market in a scramble following the Chancellor’s mini-budget last week.
Experts have said they fear interest rates could rise to six per cent next year and that the Bank of England could announce another 1.5pc rise by November.
Halifax, Virgin Money, HSBC, Santander, and Skipton are all among banks that have pulled deals in the past two days.
Bank of England chief economist Huw Pill said yesterday: “We have all seen recent significant fiscal news. That has had significant market consequences as well as significant implications.”
Read more: Truss and Kwarteng's mini-Budget blamed for huge Labour poll surge over Conservatives
James O'Brien stresses the immediate consequences of mini-budget
Speaking at the International Monetary Policy Forum, he said: “In the context of the rebalancing of the market environment and in anticipation of looser fiscal policy, it is hard not to conclude that this will require a significant monetary policy response. Let me leave it there.”
Around 1.8m fixed rate mortgages are due to expire next year.
For a homeowner with a £200,000 two-year fixed mortgage, their £800 monthly interest payment will increase to £1,103 if interest rates rise to 3.25 per cent as expected by the end of this year, meaning homeowners need to find an extra £3,156 a year, according to AJ Bell.
If rates rise to six per cent, this will jump to £1,408 a month or an extra £7,296 a year.
The IMF has issued an unprecedented statement criticising the UK tax plans, urging a re-think and saying they will ‘increase inequality.’
An IMF spokesperson said: “We are closely monitoring recent economic developments in the UK and are engaged with the authorities.
“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy.”
Homeowner already struggling in the cost of living crisis face further pressure, and first time buyers will face average mortgage bills of £1,100 per month.
One wrote online: “My mortgage has been at 2% fixed for five years. It ends next June. I am so scared. I think we may end up homeless.
Another wrote: “I am so scared. I am a single mum with children and foster children and can’t afford the mortgage if the interest rates go up any more. Low salary but working extra hours to cover costs and now even those won’t be enough. Help!!!”
The pound steadied in early trading in Asian markets on Tuesday as it recovered ground slightly.
Sterling sat around around 1.08 dollars by 7am, but economists have warned it could still fall to parity with the dollar this year for the first time.
