282,000 households in Wales hit by Tory mortgage penalty as families face annual mortgage payment increases of £2,000 this year under the Conservatives
Labour analysis reveals that household finances in Wales will be put under more pressure than ever by Conservative mismanagement of the economy.
Analysis from the Labour Party allows people to search the amount that mortgages are predicted to rise, including by £2,000 in Wrexham, £2,400 in Bridgend and £3,200 in Monmouth.
On average, the Tory mortgage penalty will cost mortgage holders in Wales £2,000.
It follows the news that many mortgage deals are being withdrawn by banks and interest rates being increased. Moneyfacts data suggests the typical rate on a two year fixed-rate loan had increased to almost 6%, almost double a year ago, and the Resolution Foundation has estimated that 6.5m households across the UK will be affected by the post-mini budget rise in mortgage rates by 2026.
Labour today (Tuesday) are using their opposition day debate in the House of Commons to force a vote on the mortgage crisis – urging MPs from across the house to get behind their package of mandatory measures to help ease the Tory mortgage bombshell hitting families.
Shadow Secretary of State for Wales, Jo Stevens MP, said:
“Across Wales, the Tory mortgage bombshell is hitting people hard.
“Wales is buckling under 13 years of Conservative economic failure, mismanagement and crisis, and it is families being asked to pay more on their mortgage once again.
“Not only has the Conservatives’ economic recklessness driven this crisis, but this Tory government’s failure to make its measures mandatory leaves around 2 million households missing out on the mortgage support they need.
“We are urging all Tory MPs to take some responsibility, and vote today (Tuesday) for Labour’s mandatory plan to ease the Tory mortgage penalty now and give households in Wales and across the UK the reassurance they need.”
- Moneyfacts data on typical two year mortgage rate: https://www.bbc.co.uk/news/business-65925224
- HM Treasury summary of external forecasts: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1157160/_Independent_Forecasts_for_the_UK_Ecpdf
- The calculations are based on estimates of the number of households in each constituency who own their home with a mortgage or loan, as recorded in the 2021 Census of England and Wales. This was sourced from https://www.nomisweb.co.uk/
- Uses house price data from the House of Commons Library. https://commonslibrary.parliament.uk/constituency-data-house-prices/
- UK Finance Data says that 8.8m households have a mortgage. Recently the Resolution Foundation have estimated that 6.5m of these households either have already remortgaged since Q4 2022, the first quarter after the mini budget, or will have to by 2026 and be affected by the rise in rates. That is around 74% of all households with a mortgage. And the Resolution Foundation estimated that on average they will pay an extra £2,900 this year. Source: UK Finance Table AP1, 28 April 2023 – sheet ‘AP1Q – OO’. Figures are for first charge mortgage lending only, on a borrower rather than account basis. They exclude buy to let mortgages. https://www.resolutionfoundation.org/publications/the-mortgage-crunch/
- Labour have applied this 75% figure to the numbers of households with a mortgage in each constituency.
- And Labour have adjusted the £2,900 cost figure in line with the difference between national average house prices and average house prices in each constituency.
Labour’s draft motion is as follows:
That this House is extremely concerned that, under this Conservative Government, average mortgage costs will be increasing by £2,900 per year, with a typical household in Britain paying over £2,000 more per year than in France and over £1,000 more than in Ireland and Belgium, and that renters face huge increases in rent payments; condemns the Government for its slowness in acting to support millions of homeowners and renters and so alleviate the impact of the Tory mortgage penalty; calls on the Government to bring in mandatory measures as the current voluntary measures could lead to around 2 million homeowners missing out on support and to immediately adopt measures to ease the mortgage crisis and halt repossessions by guaranteeing struggling mortgage borrowers can access support from their lenders and the rights of renters are strengthened; in particular calls on the Government to require lenders to allow borrowers to switch to interest only mortgage payments for a temporary period, lengthen the term of their mortgage period, reverse any support measures when requested and make mandatory repossession restrictions; and further calls on the Chancellor to instruct the Financial Conduct Authority to urgently issue guidance stating that the credit score of borrowers should be unaffected by any temporary switches to interest only mortgage payments or lengthening of their mortgage period and to introduce a renters charter that would end no fault evictions immediately.