An emergency summit of mortgage brokers has been arranged by the Labour party as UK homeowners face soaring repayments.
Shadow chancellor Rachel Reeves and shadow housing secretary Lisa Nandy will oversee the summit which is due to be held on Wednesday.
Reeves accused the Conservative government of having ‘broken’ the housing market and said: “When it comes to homeownership, people are either locked out of the market or hit hard by the Tory mortgage bombshell.”
Mortgage rates soared last September following the now infamous mini-Budget when Liz Truss was the Prime Minister. Consecutive interest rate rises, which show no signs of abating, have pushed rates up again this summer – a situation which is impacting homeowners due to remortgage and those who wish to buy a property, including first-time buyers.
Over the weekend alone, the average two-year fixed rate mortgage has risen from 6.54% to 6.63% according to Moneyfactscompare.co.uk. Meanwhile the average five-year fixed rate has increased from 6.04% to 6.15%.
Mortgage brokers have largely welcomed the summit with Rhys Schofield, director at Peak Mortgages and Protection saying he would love to be involved.
“I’d say brokers have their finger on the pulse like no one else in the industry. We’re the ones talking to clients and seeing the very real issues at the coal face,” he added.
What if he were invited? “I’d like to ask what actions could be taken for clients who simply can’t afford their new payments?
“Options like a stamp duty holiday for people downsizing, or a six-month payment holiday whilst they do so.
“Both the public and brokers are pretty darn resourceful and we could help a lot of people in a pickle with a few more tools in our arsenal. Making people’s lives easier doesn’t actually have to cost too much money.”
Tackling Bank of England base rate rises
One of the main drivers of mortgage rate rises is high inflation which, at 8.7% is well above the Bank of England’s 2% target. It has been raising the base rate in a bid to bring this figure down.
Julie Bayley, an independent financial adviser at Fordham Financial Services, said if she were able to attend the summit this would be her main focus.
“I would point out that the Bank of England hiking interest rates to curb inflation simply isn’t working because it’s not in the main being caused by consumer spending,” she said.
“If it was, then inflation would be falling because there’s no doubt in the current climate that almost everyone is feeling the squeeze and cutting back.
“The Ukraine war, Brexit and the fallout of Covid seem to have been the driving force of high inflation and those factors are being compounded by high interest rates.”
The government has been involved in creating the Mortgage Charter – a set of agreement lenders have signed up to which provide options to help borrowers who are struggling to pay their mortgage.
