The Resolution Foundation has predicted that rising interest rates mean people looking to re-mortgage their homes will pay an average £2,900 a year more from 2024 [1].
The London Assembly is concerned about the impact that high rents and mortgage payments are having on Londoners.
It is today calling for the Government to step in and provide support for homeowners and private renters impacted by the increasing mortgage rates.
Sem Moema AM, who proposed the motion, said:
“Many Londoners are facing unaffordable increases to their mortgage repayments as a result of rising interest rates. The rate of a typical two-year mortgage deal is now at more than 6% for the first time since the Government’s mini-budget in 2022 which sent mortgage rates soaring.
“Costs are predicted to rise fastest in London because of higher house prices in our city. Private renters also face rent hikes as landlords pass on higher costs to their tenants.
“It is disappointing that the Government has not stepped in to provide support to struggling homeowners with spiralling mortgage payments.
“They must now take decisive action to protect Londoners from falling into poverty and prevent rising homelessness in the capital.”
The full text of the motion is:
This Assembly is concerned about the impact that high rents and mortgage payments are having on Londoners. As of June 2023, a typical two-year fixed mortgage deal has an interest rate of more than 6 per cent for the first time since the fallout of the Government’s mini-budget in 2022 which sent mortgage rates soaring.
The high number of people that will see their fixed term mortgages come to an end this summer means that many Londoners will see their monthly budgets increase to unaffordable amounts. The Resolution Foundation has predicted that rising interest rates mean people looking to re-mortgage their homes will pay an average £2,900 a year more from 2024.
The average homeowner who renewed their mortgage since the mini-budget is now spending an extra £150 every week and the average household is paying £223 a week in mortgage interest payments, an increase of £7,000 a year. Analysis shows that costs are highest in London. This will also impact on private renters in London as landlords will pass on increasing mortgage costs.
This Assembly notes that GLA analysis found working Londoners are £50,000 worse off since 2010. With incomes not keeping pace with the cost of living, the likelihood is that increasing numbers of Londoners will fall into poverty.
This Assembly is disappointed that Prime Minister Rishi Sunak has yet to provide any extra support for homeowners during the mortgage crunch.
This Assembly calls for the Government to step in and provide support for homeowners and private renters impacted by the increasing mortgage rates.
Notes to editors
- https://www.resolutionfoundation.org/publications/the-mortgage-crunch/
- Watch the full webcast.
- The motion was agreed by 16 votes for and 6 votes against.
- Sem Moema AM, who proposed the motion, is available for interviews.
- As well as investigating issues that matter to Londoners, the London Assembly acts as a check and a balance on the Mayor.
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