Rishi Sunak faces a ‘reckoning’ as 900,000 brace for mortgage rises
Voters in traditionally Conservative ‘Blue Wall’ seats in southern England will be among the hardest hit – Adrian Dennis/AFP
Rishi Sunak faces a “reckoning” at the polls as 900,000 homeowners brace for mortgage rises before a possible November general election.
Some 4,200 mortgage holders a day are set to see their repayments rise by an average of £240 between now and an expected election in November, analysis suggests.
Voters in traditionally Conservative “Blue Wall” seats in southern England will be among the hardest hit, according to research by the House of Commons Library commissioned by the Liberal Democrats. It was based on data from the Financial Conduct Authority, the City regulator.
It comes ahead of the Bank of England’s expected decision on Thursday to keep interest rates pegged at 5.25pc, where they have remained since August. Money markets place about a 6pc chance of a rate cut tomorrow.
However, the markets are expecting a drop in the headline rate as early as next month.
Traders place a 50pc chance of the first rate cut happening at the Monetary Policy Committee’s next meeting in June, rather than in August. One more rate cut is expected by the end of the year, possibly as late as December.
This would provide some relief for mortgage holders who have seen mortgage rates fluctuate in recent months as expectations of base rate cuts have shifted.
The average two-year fixed-rate deal is now 5.93pc and the average five-year deal is 5.50pc, according to the data firm Moneyfacts.
This is down from nearly 7pc in July 2023, but still a big jump for those who had taken out a two-year deal in early 2022 when average rates were well below 3pc.
A number of lenders have increased their mortgage rates in recent weeks, including Skipton Building Society, Leeds Building Society, Virgin and HSBC.
But swap rates – the main pricing mechanism for fixed mortgages – have started to dip in the last week, suggesting markets are pricing in a cut in the near future.
The House of Commons Library research predicted that 868,000 households will face a mortgage increase between now and a potential November election.
The regions where the most mortgages are due to expire over the next six months are Greater London (104,000), the South West (103,000), and the North West (100,000).
The Lib Dems said Rishi Sunak was facing a “reckoning at the ballot box”, with Sarah Olney MP, the party’s treasury spokesman, saying: “This Conservative government crashed the economy and now they are condemning hard-working households to a mortgage nightmare.
“Rishi Sunak’s claim that the Government’s plan is working shows he is living in a parallel universe, as every day thousands of families are seeing their mortgage go up by eye-watering amounts.”
The Treasury was approached for comment.
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