Conservative Mortgage Penalty to hit over 10,000 families in Newcastle North warns Catherine McKinnell
Ahead of a debate in Westminster today on the Conservative Mortgage Penalty (27th June), Newcastle North MP Catherine McKinnell has warned that over 10,000 families face rising mortgage costs of £166 per month on average.
Analysis from the Labour Party has highlighted that 10,100 families in Newcastle North face being hit by additional cost of living pressures due to an average increase of £166 per month on mortgage costs. Newcastle North is the fourth hardest impacted constituency in the North East.
These figures follow the news that many mortgage deals are being withdrawn and interest rates being increased, with Moneyfacts data suggesting the typical rate on a two year fixed-rate loan had increased to almost 6%, almost double a year ago, and the Resolution Foundation estimating that 6.5m households will be affected by the post-mini budget rise in mortgage rates by 2026.
Catherine McKinnell, Newcastle North MP commented:
“I am seeing increasing numbers of households across Newcastle North terrified of increases in their mortgage as fixed rate deals come to an end. With households already facing a cost of living crisis with increases in food cost and the Government’s failure on their pledge to curb inflation, an increase on average of £166 per month will be devastating to families.
“After thirteen years so many families are worse off due to Conservative mismanagement of the economy and the total failure to stand up for hard pressed households.
“Labour have a five point plan to ease the Conservative mortgage penalty by introducing temporary mandatory measures to help households access support from their lenders as well as a Renters’ Charter to protect renters”.
Notes on figures:
Moneyfacts data on typical two year mortgage rate: https://www.bbc.co.uk/news/business-65925224
HM Treasury summary of external forecasts: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1157160/_Independent_Forecasts_for_the_UK_Economy__May_2023.pdf
The calculations are based on estimates of the number of households in each constituency who own their home with a mortgage or loan, as recorded in the 2021 Census of England and Wales. This was sourced from https://www.nomisweb.co.uk/
Uses house price data from the House of Commons Library. https://commonslibrary.parliament.uk/constituency-data-house-prices/
UK Finance Data says that 8.8m households have a mortgage. Recently the Resolution Foundation have estimated that 6.5m of these households either have already remortgaged since Q4 2022, the first quarter after the mini budget, or will have to by 2026 and be affected by the rise in rates. That is around 74% of all households with a mortgage. And the Resolution Foundation estimated that on average they will pay an extra £2,900 this year. Source: UK Finance Table AP1, 28 April 2023 – sheet ‘AP1Q – OO’. Figures are for first charge mortgage lending only, on a borrower rather than account basis. They exclude buy to let mortgages. https://www.resolutionfoundation.org/publications/the-mortgage-crunch/
https://www.resolutionfoundation.org/publications/macroeconomic-policy-outlook-q2-2023/
Labour have applied this 75% figure to the numbers of households with a mortgage in each constituency. And Labour have adjusted the £2,900 cost figure in line with the difference between national average house prices and average house prices in each constituency.