Mortgage misery for 230,000 families who could see £5,600 ‘penalty’ increase this year

The cost-of-living crisis is set to be worsened for about 233,000 families across South London, as new research shows their mortgage payments could soar by an average of £5,613 this year.

Research commissioned by the Labour Party shows South London households on two-year fixed-term mortgages could see huge increases in their monthly payments as interest rates continue to rise.

The figures show the Tooting constituency is set to see the highest average rise in mortgage payments of £7,000 this year.

The calculations are based on estimates of the number of households in each constituency who own their home with a mortgage or loan, as recorded in the 2021 Census of England and Wales.

Moneyfacts, a financial data company, suggests the typical rate on a two-year fixed-rate loan had increased to almost six per cent, almost double a year ago, and the Resolution Foundation estimated that 74 per cent of all households with mortgages in the UK will be affected by the rise in rates.

The foundation estimated that on average they will pay an extra £2,900 this year.

The Labour Party’s research applied a 75 per cent figure to the numbers of households with a mortgage in each constituency and adjusted the £2,900 cost figure in line with the difference between national average house prices and average house prices in each constituency.

It follows reports that many mortgage deals are being withdrawn by banks, and interest rates being increased.

Economists warned this week that there was a real risk of job losses and a sharp recession.

The latest forecasts of economic growth this year suggest that the UK is struggling to get out of the slow lane, with growth of just 0.2 per cent forecast on the year.

Bell Ribeiro-Addy, Labour MP for Streatham, said: “Whether you rent or own your home, you now pay more thanks to the Conservatives’ chronic mismanagement of our economy.

“Liz Truss’s disastrous tax giveaways to corporations and the super-rich last September have inflicted a Tory mortgage penalty on hundreds of thousands of households across our area.

“This penalty will be particularly hard felt in constituencies like mine, where house prices are higher than the national average.

“I am also concerned about the knock-on effects of this on renters as the Government continues to drag its feet on ending no-fault evictions, and refuses to give London’s Mayor the power to bring rents under control.

“Unlike the Tories, Labour would legislate to ensure mortgage holders get the support they need, and would bring forwards long-overdue renters’ reforms to protect tenants.”

HM Treasury has been contacted for comment.

(Picture: PA)