Mortgage and Rental Costs

Alex Cunningham Excerpts

Tuesday 27th June 2023 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

I well remember 1979, when mortgage interest rates soared under Thatcher’s Tory Government as the Bank of England base rate hit 17%. Those who were buying homes at the time knew all about it. My wife Evaline and I, both in relatively well-paid professional jobs, had moved home a couple of years before and, like many others, had maximised our mortgage to secure the house we wanted for our growing family. Little did we know that the cost of our mortgage would almost double in a couple of years.

My elder son John says he remembers Evaline and I regularly sitting at the table to go through our finances, often robbing Peter to pay Paul, while realising that Peter would still have to be paid with plenty of interest on top. Yes, the anxiety goes well beyond mortgage holders; it affects the whole family. Like many homeowners today, we contemplated selling up and moving to a smaller home, but the reality was that we would not only have lost our new home; we would not have been any better off.

I have huge sympathy for people today who are seeing their mortgage costs go through the roof, largely because the Tories crashed our economy by making some extremely daft decisions when our economy was still trying to cope with the double whammy of Russia’s illegal war against Ukraine and our exit from the European Union. We had it tough when our costs doubled, but today’s Tory mortgage bombshell is so much worse.

Moneyfacts data suggests that the typical rate of a two-year fixed-rate mortgage has increased to almost 6%, almost double the rate of a year ago, and the Resolution Foundation estimates that 6.5 million households will be affected by the post-mini-Budget rise in mortgage rates by 2026. Other huge consequences emanate from the Government’s decisions. This week, economists warned that there is a real risk of job losses and potential recession. The latest forecast for economic growth suggests that the UK is struggling to get out of the slow lane, with growth of just 0.2% forecast for the year.

On Sunday, I watched the Prime Minister ducking and diving under quite simple questioning from the BBC’s Laura Kuenssberg, and it sickened me that he had the nerve and the gall to tell mortgage holders to hold their nerve. He lives just down the road from me, and I wonder if he would like to sit down with a few of my constituents whose fixed-rate deals are coming to an end within the next few weeks. One of them faces an increase from just short of £800 a month to £2,600 a month. I would like the Prime Minister to outline how that constituent should hold their nerve and retain their home.

That same constituent, like everyone else, is not only seeing their mortgage go through the roof. They must also cope with a near 20% increase in food prices, which according to the Office for National Statistics is the greatest hike in 45 years. That can be added to the extra burden of council tax increases across the country, as local authorities collect the Government’s social care levy because the Tories have so drastically underfunded social care in recent years.

What are the numbers on Teesside? In Stockton North, 8,900 families face an increase of £1,400 this year. The pain is the same across the Tees valley, with 11,900 families in Stockton South paying £1,800 more, 9,000 families in Darlington paying £1,400 more, 7,200 families in Middlesbrough paying £1,200 more, 9,300 families in Middlesbrough South and East Cleveland paying £1,700 more, and 8,000 families in Redcar paying £1,500 more.

The Tory mortgage crisis has other wide-ranging impacts. The Government’s failure to build sufficient homes over the last decade has led to limited supply and forced prices up, making it more difficult for people to get on the housing ladder. We also see developers putting some projects on hold and scaling others back. The Government’s housing figures, published today, show that affordable housing providers have stalled or stopped schemes, as they are experiencing what they say is a “perfect storm” of build cost inflation, rising labour costs, material unavailability, building remediation issues and a duty to support tenants through the cost of living crisis. Developers cutting the number of homes they are building will have an inevitable impact on jobs not only in the building sector but across the supply chains that support it.

We could go on forever about the excess profits being made by the banks, as they cash in on higher interest rates, but that appears to be fine by the Government. Now that times are good again for the banks, they need to do so much more. They should concentrate on helping their customers instead of their share price and their bottom line. I wish I could be confident that they will all act, but I am not. It is down to the Government to take action to compel them to do so.

[Mr Deputy Speaker (Mr Nigel Evans)]

We now come to the wind-ups.

--- Later in debate ---

[Andrew Griffith]

I will give way in a moment. Let me say this in all seriousness: the only bombshells that we should be talking about are those that are falling on the Ukrainian people, and it cheapens the Opposition that we hear again and again the slogan of the week, and what we do not hear about is the broader geopolitical and macro environment in which this country finds itself. The British people have a much greater awareness of these matters than those on the Opposition Benches.

[Alex Cunningham]

The Minister mentions global factors, but last week the Bank of England noted that since its last decision, the swap rate—the key rate that influences mortgage interest rates—had increased almost twice as much in the UK than in the US and more than three times as much in the UK as in the euro area. Does the Minister agree with the Bank of England?

[Andrew Griffith]

I am grateful that we have belatedly found some international comparisons. The hon. Gentleman will therefore understand that we are seeing exactly the same rises—sometimes a little more, sometimes a little less—across most of the developed western economies. That is why this Conservative Government are taking action. We have helped people through these difficult times by giving the average household—[Interruption.] Do Members know how much? We are giving the average household £3,300 at a cost of £94 billion to the Exchequer. That is one of the largest support packages anywhere else in Europe. I will happily give way if any Labour Member wishes to challenge that.

When it comes to our generosity, this Government have increased the national living wage and pensions by record amounts, because this is a Government who will always put the vulnerable first. In addition to the explanations given by the Chancellor in this place yesterday, the Chief Secretary to the Treasury, in his fantastic remarks earlier today, set out in some detail our support for those struggling with their mortgage payments in these difficult times. The Chancellor’s new mortgage charter provides peace of mind about extending an existing mortgage or moving on to interest-only payments for six months, giving those who are worried about mortgage repayments some valuable respite. Vitally, it also gives genuine security to those who are at risk of losing their homes because they fall behind on mortgage payments.