Andrew Gwynne, MP for Denton and Reddish, has condemned the Government after Labour analysis revealed that families in the North West could be handed mortgage hikes of £374 a month as a result of what Gwynne has called ‘Tory economic incompetence’.
Bank of England data shows that homeowners coming off two-year fixed terms are set to be hammered by rising prices following the Conservative ‘mini-budget’, which attempted to hand unfunded tax cuts to the risk and tanked the value of the pound.
Despite the Government being forced into a climbdown on its plans to scrap the 45p top rate of tax, mortgage rates are still likely to top five or even six per cent. That would leave homeowners in the North West facing monthly increases of between £282 and £374 a month. The average increase across the United Kingdom would be almost £400 a month.
The increase in repayments will offset action on energy bills for many households. The government’s refusal to back Labour’s plans for a windfall tax on oil and gas providers meant that taxpayers were already on the hook for higher additional borrowing than they would have been under a Labour government.
Commenting, Andrew Gwynne said:
“This analysis is staggering. The Tories tried to give the super rich tax cuts, tanked the economy and now families across the North West are facing higher mortgage payments during a cost of living crisis. Local people deserve so much better.
“The Tory Party cannot be trusted to deliver for homeowners. That’s why Labour have stepped-up and committed to a comprehensive plan to target a homeownership rate of 70% and create 1.5 million new homeowners.
“People across Denton and Reddish are having to fight their way through an economic storm, all because of Tory economic incompetence.”
Keir Starmer MP, leader of the Labour Party said:
“These eye-watering mortgage increases will cause homeowners across the North West sleepless nights – and the Tory Government is entirely to blame.
“Liz Truss and Kwasi Kwarteng crashed the economy with their attempts to hand enormous, unfunded tax cuts to those who least need it. The humiliating U-turn they were forced into came too late – the damage had been done. Now people across the North West are suffering the consequences. This was a crisis made in Downing Street but paid by working people.
“The Prime Minister must reverse her kamikaze budget, including her totally unfunded £17 billion corporation tax giveaway to the biggest companies. The burden of the Tories’ fantasy economics should not fall on working people.”
Notes to editors:
- UK Finance expects around 1.8 million people to re-mortgage in 2023, suggesting nearly half a million people will re-mortgage each quarter.
- Friday’s increase in gilt yields was the highest ever seen after a fiscal statement in the era of floating exchange rates – the 58 events from 1993 onwards – https://uk.investing.com/rates-bonds/uk-5-year-bond-yield-historical-data
- Analysts expect interest rates on mortgages to rise to between 5 per cent and 6 per cent – https://www.ftadviser.com/mortgages/2022/09/27/hundreds-of-mortgage-products-withdrawn-as-rates-near-6/?page=2; https://www.ft.com/content/d9a62b84-4a51-40d6-9002-a1310ce3c8dc; https://www.forbes.com/uk/advisor/mortgages/mortgage-rates-10-03-22/
- UK Finance estimate 1.8 million people will have to re-mortgage in 2023. https://uk.news.yahoo.com/sinking-pound-sterling-mortgage-debt-interest-rates-123320628.html
- Figures assumed a 20 year mortgage term. Interest rates in Q3 2020 for a two-year fix were 1.6 per cent according to Bank of England figures. Average mortgage advance in 2020 Q3 taken from ONS. Analysis assumes borrower now pays a 5% interest rate once their two year fix ends in Q3 2022.. Full breakdown by region below: