There is growing concern among Tory MPs in marginal seats over an “interest rate catastrophe”, and the impact this will have on the party in the run-up to the next general election, expected to be held next year.
Lucy Allan, a Conservative MP in Telford, is among those that feels the party has not understood the impact of spiralling mortgages – on peoples lives, and in turn the Tory party’s chances of winning the next election.
“With the Bank of England likely to increase interest rates again this week, Allan questioned her party’s attitude to the issue. “
I don’t think we have quite understood the interest rate catastrophe,” she said. “People [are] telling me their monthly mortgage payment is exceeding their salary. That is unsustainable.”
Allan, who announced over the weekend that she would not run again at the next election, continued: “Constituents do ask about ‘support for unaffordable mortgages’. I say ‘talk to your lender,’ but the reality is they need to sell sooner rather than later and that’s a hard message to hear.”
Allies of Boris Johnson are already seeing the coming mortgage crisis as the issue that will sink Rishi Sunak’s attempts to recover in the polls before the next election.
“When you look at what is happening to mortgages, it’s really killing our own people,” said one Tory. “It feels like this is the end of a cycle – 13 years coming to an end.”
A rather concerning report from the Resolution Foundation thinktank found that UK households coming to the end of fixed-rate mortgage deals next year will face an average £2,900 increase in their annual payments. It estimated the average two-year fixed mortgage rate will be 6.25% this year.
So far, only the Liberal Democrats have backed a special package aimed at mortgage distress in the form of a £3bn “mortgage protection fund” for people facing repossession.
In response to the Resolution Foundation report, the Treasury said: “We know this is a concerning time for mortgage holders, which is why the FCA [Financial Conduct Authority] requires lenders to offer tailored support to borrowers struggling to make their payments, and we continue to support mortgage holders through the Support for Mortgage Interest scheme.
“Behind this, though, is global inflation, continuing to eat away at incomes around the world, which is why the single biggest thing we can do to help families is to halve the rate this year.”
