Households in the North West facing unaffordable mortgage costs and vulnerability to interest rate rises, Labour warns
New analysis by Labour has revealed that 80,346 households in the North West are paying more than 35 percent of their incomes in mortgage costs - an internationally recognised standard of unaffordability.
Nationally 893,000 households are in the vulnerable category. Almost half (405,000) of these households have dependent children, and the vast majority (867,000, or 97 percent) are working-age rather than pensioner households.
Labour has published the analysis drawn from the official English Housing Survey amid concern that home-owners on ordinary incomes are vulnerable to economic shocks, including a likely rise in interest rates over the next few years.
The current Bank of England rate is 0.25 percent which the OBR forecasts to rise to around 1 percent over the next few years. However other private forecasters suspect much bigger rises – Deutsche Bank have predicted inflation could top 5 percent which would lead to much sharper and higher bank rate rise.
In a potential ‘perfect storm’, lower income home-owners are set to be particularly vulnerable after April 2018 when the long running Support for Mortgage Interest (SMI) grant is due to be scrapped and replaced by a system of interest-bearing loans. In 2016/17, around 135,000 households are forecast to receive SMI.
Labour is looking at what extra security a future Labour government might be able to give to working households on low and middle incomes.
John Healey MP, Labour’s Shadow Secretary of State for Housing, said:
“Whether it’s losing your job or having your mortgage costs hiked as a result of interest rate rises, unexpected financial shocks can happen to anyone.
“The uncertainty of Brexit and stripping away of support for lower income home-owners by the current government means we need to look again at how we can help keep families in their homes if times get tough.
“Labour did it before in the wake of the global financial crisis in 2008. Ministers should now be urgently looking at how we give home-owners who have paid into the system more permanent financial security.”