Britain’s Labour opposition leader Sir Keir Starmer sounded the alarm on house price “shocks” across the UK as mortgage rates rise. The politician told City A.M on Thursday (Oct. 6) there’s “no market confidence” in the government and that “we are going to see these shocks in mortgages and housing as a direct result of it”. Analysis by the Labour Party suggests an average UK buyer coming off a two-year fixed mortgage could see a £498 monthly hike if interest rates hit 6%.
Meanwhile, Savills, one of the world’s leading property agents, has said an economic downturn could easily wipe out the estimated 13% growth over the past two years in the London housing market.
“I can see further shocks coming out of this unless the government changes course” Starmer said when asked if he is concerned about a potential housing crash, Starmer said.
Starmer’s statements came as chancellor Kwasi Kwarteng met with heads of major UK lenders to discuss how to stabilise mortgage rates which have been rising for months but saw a sharp increase following Kwarteng’s mini-budget. Lenders have withdrawn hundreds of products in recent days, which may leave some borrowers with difficulties securing a deal.
The Treasury said the chancellor would “continue to work closely with the sector” in the weeks and months ahead. Earlier this week, the rate on a typical two-year fixed rate mortgage breached 6% for the first time in 14 years, and by Thursday had hit 6.11%, according to data firm Moneyfacts.
The house price index climbed 9.9% year-over-year in September, survey data from the Lloyds Bank subsidiary Halifax showed on Friday (Oct. 7).
With rising costs of living in the UK, more than a third of homeowners are worried they may have to choose between heating bills and mortgage payments, new research by Property Rescue has found. The research has also revealed that homeowners are not only anxious about the current state of affairs. More than half are either angry (28%) or depressed (24%) about the rising prices.
“The mortgage crisis is going to be bigger than energy now,” Richard Murphy, professor of accounting practice at Sheffield University, told Reuters warning of a drop in house prices that could leave many with debt greater than the value of their home.
When asked by BBC Radio Surrey, the Labour leader said he has not paid off his mortgage.
With reporting by City AM, BBC, Reuters.
