Mortgage crisis equivalent to 6p income tax hike per family

Households facing the equivalent of 6p in income tax hikes due to higher mortgage rates. Photo: fizkes/iStockphoto

Households with conventional mortgages are facing a repayment spike equivalent to a 6p increase in income tax, an analysis by the Liberal Democrats has found.

The party tried to calculate the impact of the Bank of England interest rate rising from 0.1% per year. a little over 18 months ago to 5% where it is now after last week.

For a family that took out a £145,000 mortgage in 2021, which is in line with the average, payments on that loan will increase by £301.

This is about the same as the Liberal Democrats said that a family would pay more if the base income tax rate increased from 20 to 26 percent.

The party is calling for a «mortgage protection fund» in which households will fight to receive government support of up to £300 a month as payments rise.

Additional costs

Both Downing Street and the Treasury reject calling for more spending to help those hurt by higher interest rates, arguing that such moves would only fuel inflation and exacerbate the problem.

This position is supported by traditional economic doctrine. which states that loosening fiscal policy puts upward pressure on prices. However, this does not solve the political problem.

According to some analysts, ` outweigh the impact of last year's sharp energy price hike, which ministers decided to offset with a bill freeze.

Liberal Democrats are focused on the impact on mortgages ahead of three July 20 by-elections. held by the Conservatives, but defeat is possible given the party's poor polling scores.

By-elections are held for Uxbridge and South Ruislip, formerly held by Boris Johnson, Selby and Ainsty, available after Nigel Adams stepped down. , as well as Somerton and Frome, who were released following the resignation of David Warburton.

On Sunday, Rishi Sunak paid an unannounced visit to Uxbridge, campaigning under the sun.

Mr Johnson stepped down MP after being told that a committee of the House of Commons found him misleading colleagues because of the partygate.

Ed Davey, leader of the Liberal Democrats, said of his party's mortgage analysis: «It's a conservative tax on mortgages for millions of families. People are seeing their monthly mortgage payments skyrocket, all because the conservatives have lost control of inflation and the economy.