YOU WOULD BE FORGIVEN for thinking you have been transported back in time this week to last September. Some of the headlines from this week include ‘UK banks pull hundred of mortgage offers’, UK mortgage rates spook buyers’, and ‘House prices fall at fastest rate in 14 years’.
There is a sense of déjà vu in the air to the diastorous mini-budget delivered by the Conservative government nine months ago. The afterburn from the announcement spooked financial markets and punished households with rapid increases in mortgage rates and caused lenders to pull mortgage offers from prospective first-time buyers and those hoping to remortgage.
Nine months on and the bonfire budget delivered by Kwasi Kwarteng continues to burn a hole in the pockets of households. With worse-than-expected inflation figures last month, mortgage lenders have reacted by pulling offers and hiking up their prices.
Those with fixed-term mortgage deals coming to an end – which the Office of National Statistics forecasts is 100,000 people this month alone – will be facing repayment price hikes that will be unaffordable for some.
Of the 371,000 people coming to the end of their fixed-term mortage period between April and June this year, almost 250,000 of those have been on mortgage rates less than 2 per cent up until now. The average two-year fixed-rate mortgage offer has risen to 5.64 per cent – adding an additional £366 to the monthly mortgage repayment for households with a £200,000 mortgage. This comes at a time when people are already being squeezed with energy bills and sky high food costs.
Adding to the situation, lenders have begun to withdraw offers and started to hike up the prices for fixed-fee mortgage offers. In the last week alone, major high street lenders have increased their rate deals by up to 0.85 percentage points.
The Prime Minister pledged to help households by halving inflation by the end of the year. Yet, the Bank of England is predicted to raise interest rates to 5.25 per cent and beyond, further punishing households and squeezing any disposable income they may have even further.
I am deeply concerned for households across Chester as the cost of living crisis continues to force people to make tough choices with their finances. Decisions they may not have had to make if the Government hadn’t been so reckless with our economy.
If you are struggling with the cost of living and need support, please contact my office at samantha.dixon.mp@parliament.uk