Labour has accused the Conservatives of imposing a “Tory mortgage penalty” on homeowners, with interest rates triple those of two years ago, costing an extra £150 ($206) per week, or £7,000 per year. Shadow chief secretary to the Treasury, Pat McFadden, claimed the Conservatives had taken a “reckless economic gamble” during the mini-budget last September, when Liz Truss was prime minister. According to Labour, owners of the 1.4 million fixed-rate mortgages due to renew by the end of the year could see the cost of home ownership put further out of reach.
Labour said analysis suggests that the average interest rate for a 75% loan-to-value mortgage increased to 4.63% in April – three times the rate of 1.49% in April 2021. McFadden added that the Conservatives are responsible for the “huge worry for families” exacerbating the difficulty for those wanting to buy homes. Financial information website Moneyfacts noted that mortgage providers are increasing rates, with some pulling deals, in anticipation of a further increase in rates.
Nationwide, the UK’s largest building society, noted it needed to increase fixed rates to sustain them, stating they are “trading in a highly competitive market”. The average interest rate for a two-year fixed-rate mortgage on the market, paying all-to-lenders fees, increased from 5.49% at the start of June to 5.82% on Thursday, according to MoneyFacts figures.
Labour’s shadow chancellor, Rachel Reeves, recently called for the party’s £28bn green prosperity plan to be delayed, saying significant changes to the economic backdrop over the last two years make it necessary. A Conservative spokesperson argued Labour’s “economic credibility is in tatters” while stressing the Tory’s track record of reducing debt, growing the economy, and halving inflation.
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