A leading Trafford Labour politician fears residents face mortgage misery after the Bank of England rose interest rates for the 13th time yesterday.
Cllr Joanne Harding, Executive Member for Finance and Governance, argued that thousands of residents across the borough could be on the verge of losing their homes as the crippling mortgage crisis continues to bite harder.
“The Government needs to take action now to prevent people from potentially becoming homeless,” said Cllr Harding.
“In most daily conversations I have, be it in a personal or professional capacity, a discussion on sky- high mortgage repayments – and the real dread people are currently feeling – is guaranteed to be mentioned.
“People are caught up in mortgage misery as a direct result of this sitting Government not acting sooner.”
Struggling householders could potentially see their current mortgage payments almost double as millions of historically low fixed-rate deals come to an end.
Yesterday the Bank of England announced a 0.50pc increase in its base rate from 4.50pc to 5pc with experts predicting it could potentially reach a staggering 6pc meaning homeowners will face huge increases to their monthly repayments.
It comes after disappointing inflation figures showed price rises have not eased, with the rate remaining at 8.7pc.
Data held by the Office of National Statistics revealed the average price for a terraced home in Trafford was £340,000 in April 2023.
That is an increase of 33pc since April 2018.
Typical repayments on a 5-year fixed mortgage for an average terraced property in Trafford is now an eyewatering £1,619 with a deposit of £30,000 and a 25-year mortgage.
Cllr Harding continued: “I’ve heard from residents who can’t sleep at night for fear of losing their home.
“And from others who have geared their life around low interest rates now terrified they can’t afford to pay for the basics let alone having to find hundreds of pounds to keep up with mortgage payments.
“But this is an equally terrifying situation for renters too.
“Because the landlords they rent from also face increased borrowing costs resulting in increased rent.
“While the UK inflation rate stays stubbornly high so will interest rates – and that is what is pilling on the pressure.
“I’m not just fearful for Trafford residents – I’m fearful for everyone. In work poverty is set to rise and we need to ensure that support packages are in place.”
Labour is calling on the government to immediately adopt five measures, lasting 12 months, which include requiring banks to allow borrowers to switch to interest-only mortgage payments and lengthen the term of their mortgage period.
In addition to:
- Requiring lenders to reverse any support measures when the borrower requests
- Requiring lenders to wait a minimum of six months before initiating repossession proceedings
- Instructing the FCA (Financial Conduct Authority) to urgently issue consumer guidance to prevent the changes from impacting credit score