Mortgage Market

Pat McFadden Excerpts

Tuesday 13th June 2023 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer what assessment he has made of developments in the mortgage market in recent days.

[The Economic Secretary to the Treasury (Andrew Griffith)]

The Government recognise the anxiety that people feel about mortgages, and are using the tools at their disposal to limit the rise in rates. We are not an outlier in this regard: as Opposition Members will know, central banks around the world are raising interest rates to combat high inflation driven by the pandemic and Putin's war.

Given that inflation is the No. 1 enemy, we are focused on delivering the Prime Minister’s pledge to halve it this year. Nevertheless, I know that mortgage rates and the availability of mortgages are a concern right now. Mortgage arrears and repossessions remain below pre-pandemic levels, but if a borrower falls into financial difficulty, guidance from the Financial Conduct Authority requires firms to offer tailored support and to deal with customers fairly. The Government also offer loans to help eligible homeowners to cover the interest on their mortgages through the support for mortgage interest scheme from the Department for Work and Pensions, and make it clear that repossession must be a last resort for lenders through the pre-action protocol.

As long as economic challenges exist, we will continue to stand by families. To date, Government support to help households with rising bills in 2022-23 and 2023-24 totals £94 billion. That is equivalent to an average of £3,300 per household, as well as a record 9.7% increase in the national living wage, which I am sure that the Opposition support. While we are taking action to halve inflation and help families, the Opposition would make it all worse. The Institute for Fiscal Studies has been clear that Labour’s £28 billion a year borrowing plan would risk even higher interest rates and higher inflation, and even the shadow Chancellor has admitted that its position is reckless. This is a Government on the side of the British people and that is why, as we shelter people from rising prices, our task remains getting inflation down and getting the economy growing and debt falling.

[Mr McFadden]

The UK’s homeowners are under increasing financial stress, with two-year fixed rates at 5.86%—up by over 0.5% in just a month—products being withdrawn, and the Resolution Foundation saying that the average mortgage holder is facing an increase in payments of £2,300 this year. This is not just about homeowners; it is about renters too, because the landlords they rent from are also facing increased borrowing costs and that in turn is forcing up rents.

All this pressure was multiplied by the irresponsible decision of the Conservative Government last year to use the country for a giant economic experiment that put booster rockets under mortgage rates. While they enacted their teenage right-wing pamphlet fantasies, using the country like lab rats, homeowners and renters were left to pay the price. Since then, because inflation in the UK has been higher for longer than in many similar economies, the expectation is that interest rates will be higher for longer too, and that is what is driving up mortgage rates and piling on the pressure.

While the Ministers responsible rack up speaking fees around the world, the British public are still paying the price for the economic irresponsibility and recklessness of the Conservative party. Will the Economic Secretary now apologise for the Conservative mini-Budget last September and the lasting effect it has had on homeowners and renters around the country? Will the Government take responsibility for the decisions that they made and the consequences that followed, or is it, as they always claim, someone else’s fault? Now, instead of trying to help hard-pressed homeowners, the Conservatives are fighting like rats in a sack over an honours list and a disgraced Prime Minister. It is clear that they cannot focus on the problems of the country; the only way to do that is to change the Government and let them fight it out in opposition.

[Andrew Griffith]

We enjoy, as ever, the hon. Member’s rhetoric, but he did not address what his plan would be. He also did not acknowledge that this has an international factor. Perhaps he or one of his colleagues would like to explain why we have seen similar interest rate increases in the USA, where the 30-year rate—the market is somewhat different there—has increased from 4% at the start of 2022 to more than 6% today.