Prime minister says he knows people will be anxious about rate rise but ‘it is going to be OK’
Rishi Sunak has posted a thread on Twitter setting out what the government is doing to help people with the cost of living. It starts here.
He ends by saying “if we can hold our nerve” he is confident the plan will deliver.
Continue reading...Shadow chancellor Rachel Reeves says party would force banks to take a range of steps to protect borrowers
Labour has piled further pressure on Rishi Sunak to take action to help struggling mortgage holders as the Bank of England prepares to raise interest rates again to levels not seen since before the 2008 financial crash.
Rachel Reeves, the shadow chancellor, said on Wednesday that if Labour were currently in power, it would force banks to offer a range of support to borrowers, including letting them move on to interest-only mortgages and extending their repayment period.
Continue reading...More than 2.4m deals are ending in 2024, raising fears of financial timebomb
More than a quarter of UK homeowners on a fixed-rate mortgage are heading for sharp increase in monthly payments before the next election, in a financial timebomb that will rock the Conservatives just as voters prepare to choose the next government.
With the Bank of England expected to increase its key interest rate next week for the 13th time, figures shared with the Guardian by UK Finance, the banking industry trade body, show more than 2.4m fixed-rate homeowner deals will expire between now and the end of 2024.
Continue reading...Opposition finds fallout of Liz Truss mini-budget has raised average mortgage interest payments by £150 a week in two years
Homeowners are being hit with a “Tory mortgage penalty” of £7,000 a year with interest rates triple what they were two years ago, according to Labour.
Pat McFadden, shadow chief secretary to the Treasury, blamed what he called the “reckless economic gamble” taken by the Conservatives during September’s mini-budget when Liz Truss was prime minister.
Continue reading...Work on residential building sites slips in May to weakest level since 2009
Britain’s housebuilders are cutting back on the construction of new homes amid signs that potential buyers are being spooked by the prospect of increases in mortgage rates over the coming months.
The latest report on the construction sector found that work on residential building sites slipped in May to the weakest level since 2009, apart from when sites were locked down during the Covid pandemic.
Continue reading...Lenders forced to raise fixed-term deals after latest inflation figure pushed swap rates upwards
Households looking for a new mortgage deal have been warned to expect 5%-plus fixed-rate deals in the coming weeks, after Wednesday’s inflation figures sent the money markets back into turmoil.
Nick Mendes, the mortgage technical manager at the broker John Charcol, said on Thursday that he doubts that there will be any two-year fixed-rate mortgages and probably few five-year deals priced at less than 5% in the coming weeks, as lenders are forced to reprice their mortgages upwards.
Continue reading...Skipton building society aims product at renters who cannot save enough for a deposit
A leading lender plans to launch a 100% mortgage aimed at would-be first-time buyers who cannot save for a deposit, the first since the 2008 financial crisis.
Standard home loans where the borrower does not have to put down a deposit used to be fairly commonplace but the last was axed in the wake of the financial crisis.
Average monthly cost of owning 3-bed home is £500 a year less than renting, but the gap is narrowing
Homeowners in the UK are nearly £500 better off a year than renters, according to new research from Halifax.
The average monthly cost of owning a three-bed home for first-time buyers is now £971, which is £42 lower than the average cost of renting an equivalent property, the mortgage lender said. Renters pay on average £1,013 each month – 4% more.
Continue reading...Tens of thousands of borrowers had their loans sold on to providers at which they were unable to switch
The UK government made a £2.4bn “profit” when it pushed tens of thousands of mortgage borrowers “into poverty” after selling their loans on to new lenders, the campaigner Martin Lewis has claimed.
The MoneySavingExpert founder was speaking at the launch of a report, which he funded, into the plight of “mortgage prisoners”: a group of borrowers caught up in the fallout from the 2007-08 financial crisis.
Continue reading...Chief executive Charlie Nunn could receive £9.1m payout, while top performing bankers to share £446m bonus pot for work in 2022
Lloyds Banking Group has been accused of “stuffing the pockets of already overpaid bankers” after proposing increases for top bosses that could result in a £9.1m payout for its chief executive, Charlie Nunn.
The bank revealed on Wednesday that staff would share a £446m bonus pot – the highest in four years – for their work in 2022, despite reporting flat annual profits, after an increase in the money put aside for a potential jump in defaults.
Continue reading...Differing experts have urged the Monetary Policy Committee to both cut interest rates and to raise them
Turn up. Take the temperature of the economy. Raise interest rates. That’s the been the pattern from the responsible technocrats at the Bank of England for more than a year now – and they show no sign of stopping.
Between the depths of the global financial crisis in March 2009 and the start of the Covid-19 pandemic, interest rates were changed only five times, and three of those were in response to unexpected shocks: one after the Brexit vote in 2016, and two at the arrival of the pandemic in 2020. There was one period of more than seven years when interest rates were pegged at 0.5%.
Continue reading...Party sees identifying 50-year-old male home-owners as key to electoral success
You’ve met Mondeo Man and Worcester Woman, now meet the key swing voter Labour hopes will win them the next election: middle-aged mortgage man.
Party insiders say they are being ruthless about targeting exactly the kind of voters they believe will put them back into power, homing in on people who previously lost faith with Labour but have been personally affected by the spike in interest rates caused by Liz Truss’ “mini-budget”.
Continue reading...Nationwide warns inflation and rising interest rates will weigh down housing market
UK house prices have fallen at their fastest rate for two and a half years as the fallout from Liz Truss’s disastrous mini-budget put buyers off according to Nationwide, which warned inflation and rising interest rates would weigh on the market in the coming months.
The price of an average home dropped 1.4% to £263,788 in November, according to the lender’s house price index, accelerating a slowdown that saw prices fall 0.9% in October. It was the third monthly fall in a row, and the biggest drop since June 2020.
Continue reading...Analysis from Joseph Rowntree Foundation comes after Bank of England raised base rate
Higher monthly home loan costs will pull another 400,000 people into poverty in the coming year as the fallout from dearer mortgage rates ricochets through the housing market.
The Joseph Rowntree Foundation (JRF) said an extra 120,000 households, the equivalent of 400,000 people, will be plunged into poverty when their current mortgage deal ends.
Continue reading...Increase adds up to a £26bn rise for homeowners, says Resolution Foundation thinktank
More than five million families could see their annual mortgage payments rise by an average of £5,100 between now and the end of 2024, heaping fresh pain on households already struggling with higher food and energy bills.
The increase adds up to a £26bn mortgage rise for homeowners, according to the analysis by the Resolution Foundation thinktank which said nearly a fifth of British households would have to spend more on their housing costs by the end of 2024.
Continue reading...RICS report says rise in repossessions will add to supply while soaring interest rates price buyers out of market
Homeowners will struggle to make mortgage repayments and repossessions will rise next year as soaring interest rates and falling prices mark the end of the UK’s 13-year housing market boom, according to a sobering report from the Royal Institution of Chartered Surveyors (RICS).
The number of inquiries from potential homebuyers fell for a fifth month in a row in September, while sales fell to the lowest level since May 2020 when the housing market all but ground to a halt during the early stages of the coronavirus pandemic, it said.
Continue reading...Boss says bank is putting aside more money for potential defaults linked to cost of living crisis
The boss of Santander UK says the bank is putting aside more money for potential defaults linked to the cost of living crisis after seeing a pickup in customers falling behind on mortgage and loan payments.
Mike Regnier told the Guardian that he was keeping a close eye on the “strain and pressure” facing customers as a result of the cost of living crisis, which has made it harder for some households to keep up with rising food and energy bills and financial commitments such as home loans.
Continue reading...This live blog has now closed, you can find our latest political coverage here
In his interview with LBC Jake Berry, the Tory chairman, was asked if he was channelling When Harry Met Sally when he described Liz Truss as the “Yes, yes, yes prime minister” in his speech to the conference yesterday. (Robert Hutton is very funny about this, and much else, in his sketch for the Critic.) Berry said he was referring to Yes, Minister and Yes, Prime Minister when he delivered that line.
In the same interview, Berry revealed that his joke-making has not improved since yesterday. Talking about the conference in general, Berry said:
I think colleagues saw yesterday that when the going gets tough, the Truss gets going.
I do think my language was a bit clumsy in that regard and I regret it.
The point I was making ... is that the government needs to go for growth to ensure that it can grow the economy and Britain can get a pay rise. You don’t have to tell me how hard people graft in this economy. I know how hard people work.
We’ve got to wait until those figures are available … You simply cannot make a decision on figures you do not currently have.
Continue reading...Initiative may continue beyond December as bank bosses raise concerns over mortgage market
The chancellor is considering extending the government’s mortgage guarantee scheme after UK bank bosses raised concerns over the state of the UK’s mortgage market at a high-level meeting at No 11 Downing Street.
The meeting on Thursday – which was attended by chief executives including Alison Rose of NatWest, Charlie Nunn of Lloyds Banking Group, HSBC UK’s Ian Stuart, Mike Regnier of Santander and TSB’s Robin Bulloch – was scheduled amid mounting fears about the potential fallout from rapidly rising mortgage rates.
Continue reading...Mortgage market meltdown has left many amateur landlords facing a stark choice: to raise rents or sell up
Britain’s amateur landlords have benefited from years of runaway house price inflation, while intense competition among tenants has sent rents soaring. Now, thanks to the meltdown in the mortgage market triggered by last week’s disastrous mini-budget, many face a financial cliff edge.
Figures shared with the Guardian show that the number of new buy-to-let mortgage deals available has plummeted by 55% in less than a week as lenders frantically pulled products and in many cases increased prices.
Continue reading...