Homeowners are being hit with a “Tory mortgage penalty” of £7,000, Labour has claimed, with interest rates triple what they were two years ago.
Pat McFadden, shadow chief secretary to the Treasury, blamed what he called the “reckless economic gamble” taken by Liz Truss and Kwasi Kwarteng during their short stint in power.
Labour’s analysis found that the average homeowner is spending an extra £150 every week since their infamous mini-budget last September, which sent the value of the pound tumbling and mortgage rates soaring.
Mortgage interest payments now typically stand at £223 a week – an increase of £7,000 a year, the opposition claims.
Labour said those with a 75% loan-to-value mortgage faced average rates of up to 4.63% in April.
The same mortgage deal had an interest rate of 1.49% in April 2021, two-thirds less.
Mr McFadden said: “Britain’s homeowners continue to suffer thanks to the Tories’ reckless economic gamble.
“This Tory mortgage penalty has increased the cost of home ownership by thousands of pounds a year, causing huge worry for families, while putting the prospect of owning a home further out of reach for many others.
“Rishi Sunak might want to forget the economic misery the Conservatives have inflicted, but the public can’t forget about it as their outgoings soar.”
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‘My mortgage rose from £790 to £1,450’
In response, the Conservative Party did not reference Labour’s mortgage rate criticisms – but instead focused on the opposition’s decision to backtrack on a £28bn green prosperity plan.
Shadow chancellor Rachel Reeves on Friday said drastic changes to the economic backdrop over the past two years mean the party’s full spending pledge should be delayed.
A Tory spokesman said: “Labour proved once again this week why they can never be trusted with our economy.
“Their economic credibility is in tatters after Rachel Reeves finally admitted Labour’s borrowing spree would fuel inflation and send interest rates spiralling.
“The truth is Labour would have to resort to unlimited borrowing and hiking up taxes to fund their plans, hitting hardworking British people’s wallets.
“The Conservatives are getting on with the job of halving inflation, growing the economy, and reducing debt.”
Labour’s research comes as some mortgage lenders temporarily pulled some products from the market last week.
On Thursday, HSBC UK said it had temporarily removed some products so it can “stay within operational capacity”.
Nationwide Building Society, Britain’s biggest building society, said it needed to increase fixed rates to ensure they remain sustainable.
On Thursday, the average two-year fixed-rate mortgage rate on the market across all deposit brackets was 5.82%, according to Moneyfacts figures, up from 5.49% at the start of June.
The average five-year fixed-rate mortgage on the market on Thursday was 5.49%, up from 5.17% at the start of the month.
Written by: Newsroom