Prime Minister in mortgage plea, the Prime Minister made an intervention into the mortgage market by ordering lenders to protect struggling mortgage holders.
Rishy Sunak, via a spokesman, said: “The Chancellor has made clear his expectation that lenders should live up to their responsibilities and support any mortgage borrowers who are finding it tough right now.
“There do remain a large range of mortgage deals available to the public, but we know this current situation may be concerning for some homeowners and mortgage holders.”
It is rare for this to happen and highlights the seriousness with which Downing Street is taking the rising mortgage costs.
Quite what practical things the Prime Minister can do is debatable. ‘Ordering’ lenders to ‘protect’ borrowers is non specific, but Sunak will hope that lenders take the hint and prevent repossessions where they can.
Politically, mass-repossessions is a sign that the economy is tanking and the public will blame the government which has to go to the electorate by early 2025.
Mortgage rates have risen sharply over the last six weeks, meaning hundreds of pounds have been added to many people’s monthly repayments.
Borrowers are desperate for the Bank of England to reduce interest rates, but factors suggest it will raise them to continue its fight against inflation.
Average earnings have leapt, figures from May showed, and unemployment has also fallen.
While these might sound positive indicators, they serve to keep pushing up inflation which the Chancellor has made his priority to tackle.
And with interest rate rises the only real lever the Bank has to dampen inflation it seems likely that rates will go up – some have predicted that they could even reach six per cent.
Mike Bradley, a senior broker at Home Owners Advice, said: “It does seem likely that rates will continue to rise.
“And although wages are rising, many are still not keeping up with inflation.
“Whether the Prime Minister’s plea will have any effect we’ll have to wait and see, but I can’t see lenders radically changing rates because the Prime Minister has an election looming.
“As well as home-owners struggling, landlords are also in a tight spot. Buy-to-let profits have slumped to their lowest level since 2007 and many are selling up.
“Ideally we will see inflation fall sharply in the coming months and then perhaps the pressure will reduce on the Bank to put up rates.”